Subject: [NEXTEL-1] FWD: Nextel Reacts Harshly To Critical Report

From: "Paul J Zawada" <[email-masked]>
Date: Fri, 22 Nov 2002 17:43:23 -0000

This came over the transom and into my email inbox this morning.  
More on what happens when an analyst tries to point out "How Business 
Gets Done..."

--zawada

          Nextel Reacts Harshly To Critical Report

     As regulators move to eliminate conflicts of interest in Wall 
Street stock coverage, a recent spat between Nextel Communications 
Inc. and an analyst serves as a reminder of a continuing fact of 
life: If you raise tough questions, prepare to be raked over the 
coals. Last month, Thomas J. Lee, a J.P. Morgan Chase & Co. 
telecommunications analyst, released a report examining, among other 
issues, how Nextel was accounting for the number of customers leaving 
its service and questioning whether the country's fifth-largest 
wireless carrier was low-balling its bad-debt expenses. Within hours, 
Nextel's chief financial officer, Paul Saleh, was on the phone to 
Lee's boss, the head of J.P. Morgan's North American research, 
accusing the analyst of faulty work. Nextel's general counsel, 
Leonard Kennedy, meanwhile, called Bill McDavid, J.P. Morgan's 
general counsel, accusing Lee of leaking the contents of his report 
to select investors before the report was published and released to 
all J.P. Morgan research subscribers. That is a serious accusation. 
Both the Securities and Exchange Commission and the National 
Association of Securities Dealers ban analysts from leaking to 
favored investors the contents of a report before its general 
release. Such leaks run counter to fair-and-equitable trading 
principles.

      Nextel says it was told by "several investors," whom it 
declines to name, of the alleged leaks. But J.P. Morgan's lawyers 
launched an extensive, two-week search for evidence that Lee tipped 
off selected investors before the report's release, according to 
people familiar with the examination. The search included a lengthy 
review of Lee's e-mail and telephone records. The bank ultimately 
exonerated Mr. Lee of leaking any information, and McDavid called 
Nextel back, saying the bank didn't find any evidence of wrongdoing 
and adding that analysts needed to "call it as they see it," the 
people say. As for its part, Nextel insists any actions it took that 
day weren't an effort to bully an analyst to get positive commentary. 
Instead, it says it was pushing for fairness and accuracy.

     The incident shows that, despite all the recent focus on 
conflicts of interest in Wall Street research, some companies 
continue to exert pressure on analysts who write tough reports or 
issue "neutral" or "sell" recommendations on their shares, and their 
reactions can go beyond the deep freeze that has surfaced 
occasionally over the years. That's when a company shuts off an 
analyst's access to company managers who typically help provide data 
to analysts. The Nextel matter also indicates that regulators have a 
long way to go in tackling the pressures that face analysts who 
publish hard-hitting research. Regulators are probing whether some 
Wall Street analysts touted stocks of companies that are clients of 
their firms' investment-banking departments, to help win lucrative 
banking fees that fed into personal bonuses.

(for more information see:
http://online.wsj.com/article/0,,SB1037919095183350308,00.html?
mod=home_whats_news_us )
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