First Union Corp.'s stock continued to languish Wednesday amid skepticism on Wall Street about the company's earnings projections.

On a day when stocks of most banks-and all other large banks-rebounded strongly from recent selloffs, First Union's moved up 1.1% after its 8.8% drop on Tuesday.

Gains were steep at other large banks. Wells Fargo & Co. stock was up 7.8%; Bank of New York 6.8%; and Bank of America Corp., First Union's archrival, 5.2%. (See story on page 26.)

"Most people on Wall Street have abandoned the stock," said Michael Wiener, a money manager at Banc One Investment Advisers. "Those who still hold it say it's 'too cheap to sell.' They're the worst four words on Wall Street."

Plagued by lower-than-expected results from its 1998 acquisition of Philadelphia's CoreStates Financial Corp., the Charlotte, N.C.-based banking company revised its 1999 earnings estimate on Tuesday. Earnings are now expected to decline to $3.50 a share, well below previous estimates of $4. First Union earned $4.66 a share in 1998.

The revision announced Tuesday was the second this year and jolted portfolio managers and analysts, making many of them bearish on the stock. Since the announcement, at least nine analysts have downgraded the stock.

First Union, the sixth-largest bank nationwide with $223 billion of assets, attributed the expected lower earnings to problems in integrating CoreStates and to increased costs stemming from investments in its asset management and Internet banking businesses. Also, the bank increased its loan-loss reserves.

"Our core operations are running well," Mary Eshet, a First Union spokeswoman, said Wednesday. "Management has been successful in building strong foundational businesses and credibility will increase again as we continue to deliver from our business model."

The markets still must be convinced. Mr. Weiner said in an interview that his firm sold half its holdings of First Union after the January announcement, lessening the impact of this week's selloff. Mr. Weiner said the decline was the result of an "unraveling" of gains made when the merger was announced.

Carole S. Berger, a principal of Berger & Jackson Capital Management, a New York-based hedge fund, said "for the short term, management is in the penalty box." While First Union remains a good company, "this is one of the bigger disappointments we've seen in this industry for many years. That happens. It just takes time to regain credibility."

But can First Union afford the time? Analysts such as Sean Ryan of Bear, Stearns & Co. said even before the announcement that First Union could be a takeover candidate. Mr. Weiner said a few years ago that would have been unthinkable but now it's less so.

Thomas K. Brown, a money manager with Tiger Management in New York, said that if First Union fails to live up to its current estimates, "the company is history as an independent entity." He said even if First Union meets its estimates, it will have generated an annualized growth rate of only 5.7% from 1994 through 1999.

Though chief executive officer Edward E. Crutchfield ruled out any possibility of putting the company up for sale, observers said the market might act whether or not Mr. Crutchfield agreed. Analysts said they were alienated by First Union's history of springing surprises on Wall Street.

"He has cried wolf way too many times for people to take him at face value," Ms. Berger said.

Still, First Union's woes may scare off any potential buyers for the time being, she added.

"If you are a buyer, you have to be fairly certain the problems they have are not contagious," Ms. Berger said.

What troubles observers are factors such as the CoreStates integration and the First Union's initiative with Future Bank, an initiative to reduce administrative costs at branches. That will be achieved in part by moving functions to a central calling center.

David C. Stumpf, an analyst at A.G. Edwards & Sons Inc. in St. Louis, downgraded the stock to "reduce" from "buy" Wednesday, based on an erosion of confidence in First Union.

"I can't confidently stick with this name even though the stock is off," Mr. Stumpf said. "I don't see what the catalyst will be in the intermediate term to create an upside potential."

"On paper and in theory the initiative sounds great," Mr. Stumpf said. "Maybe there are customers who want remote banking at midnight from their beds. But a lot of customers are not embracing that."

Ms. Eshet, the First Union spokeswoman, said that when Future Bank is fully up to speed it will allow branch employees to spend 80% of their time selling services to customers, up from 20% in the old structure.

"It is our way of redesigning the traditional bank to bring products and services to customers when, where, and how they want them," she said.

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