Years of losses may not be so bad for a stock. Neither, perhaps, is having more liabilities than assets.
Among the 28 large US companies with negative shareholder's equity and cumulative losses, 20 have risen so far this year.
Gainers include Lucent Technologies Inc, with US$25.4 billion in losses, and EchoStar Communications Corp, which has had a quarterly profit three times in eight years.
Some investors offered a simple explanation: Every dog has its day. Others said the gains show there may be bargains among the wreckage of the technology-stock bubble that peaked three years ago.
"It's a good lesson: Don't just walk away from negative equity, there's a chance to really create value," said Christopher Bonavico, who helps manage US$12.5 billion at Transamerica Investment Management.
Transamerica owns 7 million shares of EchoStar, the second-largest US satellite-television broadcaster. The Littleton, Colorado-based company has lost US$2.9 billion since it was started.
Its liabilities exceed its assets by US$1.2 billion and it has US$5.7 billion in debt.
EchoStar shares have jumped 50 percent this year, outpacing the 6 percent gain of the Standard & Poor's 500 Index. On Friday, EchoStar closed unchanged at US$33.28.
Bonavico credited the company's solid niche in a growing industry, its management and its cash. EchoStar, unlike even some profitable companies, has strong cash growth that should allow it to pay back its debt, he said.
The company's free cash flow, or cash from operations minus capital expenditures, rose to US$125 million in the first quarter from US$89 million a year earlier.
The stocks of other money-losing companies have fared even better than EchoStar's.
ImClone Systems Inc, the pharmaceutical company at the center of an insider-trading scandal, has risen 85 percent this year; the stock fell US$1.21 to US$19.63 Friday. Lucent, the largest US telephone-equipment maker, is up 71 percent. Amazon.com Inc, with US$3 billion in cumulative losses, has risen 64 percent. Shares in the Seattle-based company rose US$0.52 to US$30.97 Friday.
Many of the companies are in telecommunications, Internet, media and computer-related industries hurt by the slowdown in the US economy since 2000.
Their increases are just tracking the market, with the gains magnified because the shares already had fallen so much, said Joseph Stocke, chief investment officer at Stoneridge Investment Partners, which manages US$500 million.
Lucent, for instance, closed at US$2.15 on Friday after peaking at US$64.69 in December 1999.
"It's not surprising that these companies are outperforming -- just like when the market is going down, they tend to be the ones that get hardest hit," Stocke said.
Others said there could be real reason for optimism.
In telecommunications, some investors are betting that a decline in sales may have eased. First-quarter profit at AT&T Corp and BellSouth Corp topped forecasts.
Spending by US companies on communications equipment rose an annualized 19 percent in the first quarter from the fourth quarter, said James Glassman, senior US economist at J.P. Morgan Chase & Co.
"Last year's problems are often this year's winners," Glassman said.
Billionaire Warren Buffett, the world's second-richest man, is among the investors backing telecommunications.
Buffett's holding company, Berkshire Hathaway Inc, spent US$500 million with two partners last year to buy convertible bonds of Level 3 Communications Inc, a data-network company that has lost US$6.5 billion and has US$6.1 billion in debt.