Dow Jones 8,473.11 -166.08   4:31pm  EST, Tue., July 16, 2002  NASDAQ 1,375.26 -7.36  For info, visit access.smallcapnetwork.com .  S & P 500   899.99  -17.94  To be removed, please click here .  Russell 2000    407.27 -1.81  VOLUME 02: ISSUE 48 Meet The Best Performing Telecom Company The gut wrenching pain inflicted by telecom companies on their investors have been unequaled.  Sure, the death of dotcoms hardly left their believers unscathed but internet companies were abstract.  Most had no tangible assets outside of servers and expensive Herman Miller Aeron chairs.  Telecoms on the other hand billions in assets from fiber to routers.  Unlike their dotcom brethren, telcos also had big revenues but unfortunately also big losses. The list of telco carcasses number far and wide from Northpoint Communications to Global Crossing.  The list of causalities looks to add a few members with the demise of Qwest (Q) and WorldCom (WCOME).  The rest of the group isn't faring much better.  Take a look at the American Stock Exchange Telecom Index (^PHN) which is down a whopping 48% in 2002 alone.  The problem with all the telecom companies is that they are choking on debt.  Servicing debt coupled with intense competition and eroding margins has led to the increased number of bankruptcies.  However, sometimes it may not be that bad for a company to enter bankruptcy.  Case in point, today's edition is about the best performing telecom company.  This company not only filed for bankruptcy but also emerged from bankruptcy.  This is quite an accomplishment considering that most bankrupt companies never make it back. The image below shows how well some of the top telecom companies have performed since September 17th. Not a pretty picture but there is one standout.  Covad Communications (COVD) was left for dead but the company's resiliency and management led the company out of bankruptcy.  Since September 17th the company's stock has gained 120.41%.  That's a number all investors wish they could see. It seems that investors aren't the only ones noticing the company's turn around.  Through our sources, the SmallCap Digest has learned that there is an internal memo floating around Sprint that mentions "the deal with Covad is Done".  We believe these sources to be reliable but have no guarantee on what the deal is.  Just last Friday Sprint said it will phase out digital subscriber line service, or DSL, in markets where it's too expensive to provide it or where the company has found cheaper means of supplying high speed data or Internet access.  DSL service is expensive to offer and not very profitable in areas where companies like Sprint have to rely on other local carriers to hook customers up.  The company said DSL service in markets where it's the leading local phone provider won't be affected. Could a deal announcing the Covad/Sprint alliance be far off?  There is even more talk around the water cooler as Covad is rumored to be signing deals with AT&T and other large carriers as well. Covad Communications is the best turnaround story in telecom for 2001-2002 and without filing for bankruptcy this never could've happened.  The biggest question for the company now is whether it will be acquired or if it will continue to move forward on its own.  D I S C L A I M E R : The SmallCap Digest is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. SmallCap Digest is not a registered investment advisor or broker-dealer. 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