When C. Michael Armstrong rolled into Basking Ridge, N.J., on his Harley-Davidson in 1997, he was billed as the

AT&T

(T) - Get Report

boss hog who would manage one of history's grandest corporate turnarounds.

Three years later, though, he's just trying to manage expectations.

As the company prepares to report first-quarter earnings Tuesday morning, investors are desperately searching for clues that Armstrong's ambitious, multibillion-dollar broadband plans haven't fallen by the wayside. AT&T's stock has stagnated in recent months amid reports that telephone customers haven't warmed to the new cable offering, and two top executives have left the division for greener pastures. So a failure to meet Wall Street's expectations (earnings are pegged at 53 cents a share) or to deliver rosy numbers in cable growth could chill the stock further.

Shaken, Not Stirred

"For a while, people were convinced of AT&T's broadband plans, but I think that conviction has been shaken," says

First American

equity research analyst Kevin Earley. "The big risk right now is that they may be falling behind on the broadband front.

"I'd like better color on how they're progressing with their cable rollout," says Earley, whose firm has a substantial position in AT&T.

Other shareholders worry that executive exits and the IPO of the wireless division, among other things, have distracted management. "I think people really want to see more detail about how the whole kit and kaboodle looks," says

Stein Roe

fund manager Ophelia Barsketis, whose firm controls $550 million in investments and has a significant position in AT&T.

Shrinkage

Shares of AT&T tickled the low 60s in late March, as enthusiasm surrounding the IPO of

AT&T Wireless

(AWE)

took hold. With April bringing a widespread tech selloff, however, and AT&T's $22 billion-a-year long-distance business continuing to shrink, the price has returned to the high 40s.

Judging by news reports, shareholder anxiety can only have spread in recent weeks. Several media outlets reported Friday that at the end of the first quarter, AT&T had signed up just 10% of its year-end subscriber target of 400,000 to 500,000 customers for phone service via cable. That news follows word last week that AT&T's head of cable telephony, Curt Hockenmeier, left the company to take an executive position at

Arbinet

, an Internet bandwidth exchange.

Hockenmeier is the second major departure from the AT&T Broadband division. Late last year, chief Leo Hindery quit to take the CEO job at upstart

Global Crossing

(GBLX)

.

AT&T downplayed the departures Monday and says it expects to hit its cable-telephony subscriber target this year.

Cheap, Cheap

Of course, all the bad news has some shareholders looking at the bright side, despite the steep challenges.

"They have some significant hurdles in terms of technology and the upgrade of their cable plant," says hedge fund manager Michael Kaufman of

K Capital Partners

. Kaufman's firm controls $500 million in investments and has a $10 million stake in AT&T.

"But AT&T is cheap in relation to the other big-cap telcos, and especially inexpensive compared to other highfliers in the sector," Kaufman says.