Ugh. The tech meltdown turn toward the telecom sector this week, fixing its dark gaze on companies like AT&T, Verizon, and Sprint Nextel, among others.

On Thursday, shares of telecommunications companies fell badly from the ongoing fallout amid credit concerns.

The carnage was grim and deep. U.S. traded shares of Paris-based Alcatel-Lucent fell nearly 5 percent. Ciena Corp. fell ahead of its earnings report, scheduled for Friday.
Novatel Wireless Inc. was an exception, as its shares rose more than 3 percent after the wireless modem maker said it will buy back up to $25 million of its stock through Sept. 5.

A rundown of telecom stocks from Thursday's trading . . .

-- AT&T, down 43 cents to $35.02

-- Sprint Nextel Corp., down 20 cents, or 2.9 percent, to $6.80

-- Verizon Communications Inc., down 67 cents to $35.28

-- Alcatel-Lucent, down 28 cents to $5.41

-- Ciena, down $1.05, or 4 percent, to $24.94

-- Novatel, up 34 cents to $10.77

I'm particularly concerned about Sprint. Last week, week, Sprint's shares plummeted 20 percent following lousy earnings results and a bleak rest-of-2008 forecast from the nation's third-largest wireless carrier.

Today, CNET News is reporting that rumors are swirling today over the future of Sprint. "First off, Seeking Alpha is reporting that Sprint has hired Morgan Stanley for a possible spin-off of its Nextel brand. Sprint's ongoing troubles have been widely reported over the last few months and many analysts have named the 2006 merger between Sprint and Nextel as a key cause of the carrier's ongoing troubles. With that in mind, a spin-off of Nextel may be surprising, but it wouldn't be so shocking."

"But that's not the only Sprint dish going around today. The Kansas City Star said that Merrill Lynch analysts are predicting that Deutsche Telekom, owner of T-Mobile USA, is considering buying Sprint. The joining of a CDMA and a GSM carrier seems a bit unlikely, but after Sprint scooped up Nextel I can believe just about anything. Yet what would seem more probable is a Verizon Wireless acquisition of Sprint. But as the Wall Street Journal points out, Verizon should just concentrate on sucking away Sprint's customers. Verizon already decided in 2004 not to buy Sprint so the Journal can't find a reason why it should try again."

Last week I wrote how Sprint was having some difficulty turning its financial ship of state around. New management, weak sales, increased competition, and a stagnating economy won't help that process along any further. Stay away from this former high flyer.