Telecom provider WorldCom (WCOM) dropped more than 20% Wednesday, and much of the telecom sector went down with it.

After announcing reduced revenue growth for the current and coming quarters, WorldCom may get the blame for dragging other large telecom companies with it, but it isn't entirely at fault.

With long-distance voice service rapidly becoming a commodity, WorldCom's

announcements Wednesday were a catalyst for fears about pressures that will be felt by its long-distance backbone competitors as well.

Competitors

Sprint

(FON)

and

Qwest

(Q)

also were down 10% and 6%, respectively.

Merrill Lynch

,

Wachovia Securities

and

Credit Suisse First Boston

all downgraded WorldCom after the company announced revenue growth from 11% down to 8% for each quarter. The revenue forecasts followed WorldCom's announcement it would split off a company carrying the MCI name for its small business, long-distance and dial-up Internet access operations.

It's the second such split in a week and may not be the last. AT&T announced that it was doing the same last week and the rumors are that Sprint is considering a similar move.

Another question is how well WorldCom -- and other long-distance voice carriers -- can compete with new long-distance wholesalers aiming to reach the market early next year. WorldCom, with a greater percentage of long-distance business, may carry more exposure to such pressures than others in the space.

As with other carriers, WorldCom is not just facing competitive pressure at home, but also in Europe, where recently deregulated telephone markets are creating fierce competition and a devalued euro cuts into earnings.

The pressures WorldCom are facing are not unique to the company, said analyst Steven Shook of Wachovia Securities. (His firm has done no underwriting for WorldCom.)

CSFB downgraded WorldCom from buy to hold; Wachovia knocked it from long-term buy to neutral and Merrill Lynch from accumulate to neutral.

2:50 p.m.: Headed for Terra Infirma

Semiconductor stocks headed south Wednesday, led by estimates of lower communications and networking spending and oversupply in some specialty chips.

Tuesday's drop was led by downgrades and warnings about the makers of programmable logic devices, handy chips used in the switches and routers that run network traffic. Analysts see evidence of an oversupply of the chips. This buildup, aggravated by slowing spending in the communications and networking markets, is putting the brakes on growth of demand for PLDs.

An overall slowdown in demand for semiconductors in the coming year, especially for PCs and telecommunications equipment, led to warnings and downgrades of other chip makers as well. The

Philadelphia Stock Exchange Semiconductor Index

was down more than 3.5%.

"The signs are becoming irrefutable that we are in a cyclical downturn," said Clark Westmont, analyst for

Salomon Smith Barney

.

PLD maker

Altera

(ALTR) - Get Report

was dropping more than 17% in trading Tuesday. After the close of market, Altera revised its revenue estimates for the current quarter to the lower end of a 12% to 15% growth range.

W.R. Hambrecht

cut its rating from strong buy to neutral for Altera and from buy to neutral for competitor

Xilinx

(XLNX) - Get Report

, which was down more than 5%.

Hambrecht analyst Jim Liang said he was predicting an inventory correction that was likely to hit Altera in the March 2001 quarter, as manufacturers work through stockpiles of previously ordered components.

Another casualty of the glut is fellow PLD maker

Lattice Semiconductor

(LSCC) - Get Report

. Lattice was trading down more than 12% in recent trading.

A

Morgan Stanley Dean Witter

report said it was revising its estimates for 2001 semiconductor company growth down to 26% from 29%.

In addition, Morgan Stanley Dean Witter lowered its ratings on

KLA-Tencor

(KLAC) - Get Report

,

Applied Materials

(AMAT) - Get Report

,

Lam Research

(LRCX) - Get Report

and

Advanced Energy Industries

(AEIS) - Get Report

to outperform from strong buy, based on low capital spending growth in the chip industry. Applied was down more than 4%, KLA-Tencor was trading more than 2.5% down, Lam Reasearch was down more than 3% and Advanced Energy was trading nearly 3% lower.