By Stephanie N. Mehta

(FORTUNE Magazine) – What we said

In "Finding the Reward in Telecom's Risk," (Oct. 18, 2004), we warned that investing in telecom was only going to get trickier as the cable guys, phone companies, and wireless operators sought to invade one another's turf by betting on new technologies and slashing prices. We suggested four telecom-equipment stocks that seemed poised to benefit from the battles.

What happened

We made some bad calls. Avaya (AV, $11), a maker of corporate phone systems that run on voice over IP (VOIP) technology, sank earlier this year when it forecast a weaker than expected 2005. The stock is down 20% since we cited it. In the past year both the CFO and the CEO of Tekelec (TKLC, $15) resigned; shares are off 12% since our story. Alvarion (ALVR, $8), which makes equipment for a hot new wireless standard called WiMax, has seen its shares fall 38% as big names like Motorola and Alcatel have stepped up plans to build WiMax gear. Finally, we recommended wireless chip and software maker Qualcomm (QCOM, $45), cautioning that it already had a rich valuation. The stock is up 15%, and analysts think it could go still higher.