BABY BELL CEO AWES WALL STREET.

Byline: Floyd Norris The New York Times

Raymond Smith gives Wall Street the deals it loves, and when he announces a big merger, Bell Atlantic's stock price goes up. It happened again Monday, when his company announced its merger plans with Nynex, to form a local telephone giant with visions of getting into long distance.

Thirty months ago, Smith, the chairman and chief executive of Bell Atlantic, wowed investors with a visionary plan to merge the Baby Bell with Tele-Communications Inc., the cable giant. And in the same week, he announced that Bell Atlantic would invest $1 billion in Mexico's largest cellular telephone company.

As it happens, neither of the deals announced in October 1993 looks especially good now. Then, the popular idea was that cable companies had the inside track on the information superhighway, with their coaxial cable clearly superior to the telephone companies' copper wire. So Bell Atlantic was moving into the fast lane. Now, the conventional wisdom is that phone companies have the upper hand, in part because of access to capital.

As for Mexico, in the wake of the North American Free Trade Agreement, it was widely viewed as a country with assured growth, headed for a new era of prosperity. Then the peso collapsed.

Fortunately for Bell Atlantic shareholders, the Tele-Communications deal fell apart after the federal government decided to regulate cable rates. There was no agreement on price, and the two companies went their separate ways.

Unfortunately for those same shareholders, the Mexican deal did not fall apart. Since then, it has produced a steady stream of red ink for Bell Atlantic, as economic growth vanished. To make things worse, the cellular company had financed itself with a lot of dollar-denominated loans, and was badly hurt by the devaluation of the peso.

At a news conference Monday, Smith spoke glowingly of the prospects of a combined Bell Atlantic and Nynex, with the clout together to invade the long-distance market that he now sees as the key to rising profits.

Asked whether he was happy that the Tele-Communications deal had failed, he responded, ``There is no question that I am glad,'' and added, ``You look at the comparable stock prices over time, and you'll see why.''

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Map

Map: (Color) THE BABY BELLS GROW UP

Four of the original seve n Baby Bells have now announced proposals to join forces - in two separate deals - to create larger local companies.

Knight-Ridder Tribune Graphics Network