KEEPING FAITH EDISON STOCK HOLDOUTS RISK LOSING VIRTUALLY EVERYTHING IF ONCE-STABLE COMPANY GOES BANKRUPT.

Byline: John W. Cox Staff Writer

Gary Parsons could kick himself.

Four months ago, his investment in Edison International, the Rosemead- based parent company of Southern California Edison, was worth about $80,000. Now it's worth about a third of that.

While attention has focused in recent months on the utility's financial problems, there has been far less concern about how the state's energy crisis could affect Edison shareholders, many of whom bought the stock as part of their retirement planning strategies.

Parsons, for example, bought about 2,500 shares of Edison International during his nearly 20 years as a steam turbine repairman at the former Southern California Edison power plant in Long Beach.

His confidence was put to the test in September when Edison's stock, which trades on the New York Stock Exchange under the symbol EIX, rose sharply and then fell below $25 on worries about the impending deregulation of the state's electrical power system. The stock is now worth about $10 a share.

As other investors were selling their shares of Edison, Parsons held pat. ``Everybody was panicking, and I thought, `Well, I'm not going to panic,''' said Parsons, a Bellflower resident who now works for the power plant's new owner, AES, an Arlington, Va.-based independent power generator.

Edison is billions of dollars in debt to power generators, and fears that the utility could go bankrupt are at the center of the state's worsening power crisis.

Edison investors now find themselves in a dilemma. If they sell now, many of them will lose years of steady gains. But if they continue to hold out, they risk losing virtually everything in Edison bankruptcy proceedings.

Some analysts who follow Edison's stock still hold out hope that state legislators will come up with a solution that will spare the utility, and by extension, its stock price.

David Burks, a utilities analyst for J.J.B. Hilliard, W.L. Lyons Inc. in Louisville, Ky., has placed a ``hold'' rating on Edison International's stock. Despite Edison's deregulation troubles, Burks said the company's long-term outlook - especially regarding its operations outside California - remains good.

``We still think it's a solid company that is just unfortunately backed into a corner at this point,'' Burks said Wednesday.

The real problem with Edison's stock, Burks said, is uncertainty over what the state can and will do to avert Edison's bankruptcy.

``Generally, one of the things that the financial markets hate and fear more than anything is uncertainty,'' he said.

What distinguishes Edison's stock problems from those of other troubled companies is that Edison was for a long time considered a safe bet worthy of even the most conservative investment portfolios.

``Utilities are always considered a conservative investment,'' said Michael Peevey, a Pasadena telecommunications businessman who said he sold off the last of his Edison shares several months ago after holding them for more than a decade. Peevey said he took proceeds from sale of his Edison stocks and reinvested them into technology issues.

Gregg Whelan, a senior vice president with Salomon Smith Barney, agrees that utilities tend to be a solid investment. Nevertheless, he said deregulation uncertainties prompted the firm to ``keep a very close eye'' on Edison stock last year. When the shares plummeted for no apparent reason about four months ago, he put out calls to his clients advising them to sell.

But a number of Whelan's clients - most of whom are retirement-age - ignored the advice and kept the stock.

``Some were in disbelief that something could happen to good old Edison,'' Whelan said.

Some investors heeded the warning signs, of course, and put out an order to sell. But there are those who kept at least some of their Edison stock, hoping for a legislative solution to the company's debt.

``I think it could go either way,'' said Altadena retiree Roger Rumsey, who said he recently sold two-thirds of his Edison stock at a modest profit, having bought it years ago at about $9 a share.

``It's a political deal, and if (Gov. Gray) Davis moves in the right direction, the thing will come out all right.''

Rumsey even said he is looking for the right opportunity to buy back in when the time is right.

``I don't really have too much hope, but I'm interested,'' he said.

Rosemead resident Rodney Ogletree said he can't afford to lose hope. He owns just under 8,000 shares of Edison International that he purchased while working with Parsons as a turbine maintenance man over a 20-year period.

Ogletree said he now avoids checking the price of Edison stock because, ``I don't want to get depressed.'' But he noted that all is not lost until he sells or the company goes bankrupt.

``I haven't lost anything until I sell,'' he said. ``I'm gambling that it's going to turn around.''

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4 photos

Photo: (1 -- color) Power lines pass through agricultural fields in Oxnard. Some stock market analysts think Edison International's outlook remains good in the long run.

(2 -- color) The deregulation law requires that Southern California Edison sell power plants such as this one in the Oxnard area.

Michael Owen Baker/Staff Photographer

(3 -- color) Former Edison International employee Gary Parsons decided to keep his 2,500 shares of company stock.

(4) Gregg Whelan of Salomon Smith Barney in Long Beach advised clients to sell shares of Edison International.

Leo Hetzel/Staff Photographer