Subject: [NEXTEL-1] Nextel Results Recharge (NOT) Wireless Outlook

From: Marcel <[email-masked]>
Date: Fri, 25 Oct 2002 15:40:47 -0400

Amazing!

Timmy on the Conf. Call at 8 AM

Timmy on TV at Noon.

Timmy on TV at 8pm.

Timmy in the print media all day.

And what does the stock do?

T-A-N-K!

Timmy time for some new "Spin Maseters"

Even Wall Street has caught on-

Goldman said: "Nextel is a 1 Trick Wonder"

http://biz.yahoo.com/ibd/021025/tech_3.html
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Nextel Results Recharge Wireless Outlook
Friday October 25, 11:08 am ET

By Reinhardt Krause

Good third-quarter earnings reports from AT&T Wireless Inc. and Nextel Communications Inc. (NasdaqNM:NXTL - News) helped a couple of wireless stocks rally Thursday.
Nextel early Thursday posted its second quarterly profit in a row, as the No. 5 U.S. wireless phone company gained market share. On Wednesday, No. 3 AT&T Wireless posted better-than-expected results.
The news boosted AT&T Wireless shares by 18% to 6.45. It also helped shares of Sprint PCS, the nation's fourth-largest wireless provider, which rose 19% to 3.65.
Nextel shares fell at the end of the trading session, as did many other stocks. But Nextel shares earlier Thursday were nearly up to 12, from less than 3 in June. These are the only three of the top six carriers that have seperate stocks for wireless.
It may be too early, however, to say that prospects are improving for wireless carriers, analysts say. They fear some carriers might fall short of year-end subscriber targets, as industrywide growth remains tepid.
"AT&T Wireless is giving out aggressive guidance for the fourth quarter," said Craig Mallitz, an analyst at Legg Mason Wood Walker Inc. "Sprint says the same thing. Verizon says the same thing. Cingular says the same thing. Something or somebody has to give."
Nextel, which focuses on business customers rather than consumers, added 480,000 net subscribers in the third quarter. That's about par with the year-earlier quarter.
The company is doing better than most other U.S. carriers. No. 2 Cingular Wireless and Sprint PCS both lost customers in the third quarter, and subscriber growth at AT&T Wireless fell 73%.
Analysts expect the largest wireless carrier, Verizon Wireless, to post strong results when it reports Friday. And No. 6 T-Mobile, formerly VoiceStream, is marketing heavily and gaining share, analysts say.
Unlike the others, Nextel isn't engaged in a nasty pricing battle for consumers. It provides a Direct Connect voice-conferencing service for business users that rivals haven't matched.
"Nextel has a different product," said Mallitz. "You have five other guys competing against each other that basically look like clones."
In the second quarter, Nextel posted its first-ever profit, helped by early debt retirement. Excluding special items, Nextel reported third-quarter earnings of 14 cents a share, up from a loss of 27 cents.

"Most carriers struggled in the third quarter," said Roger Entner, an analyst at researcher Yankee Group. "But Nextel recorded strong (subscriber) growth and a corresponding increase in revenues and profitability, while ARPU (average revenue per user) held steady."
Its customers pay an average of $71 monthly. The other big carriers average $48 to $62 a month.
Amid slowing subscriber growth, Nextel isn't the only carrier trying to squeeze out better operating results. Aside from earnings, carriers cite how soon they'll generate free cash flow. That measures cash flow from operations minus capital spending. Or they point to earnings before interest, taxes, depreciation and amortization, or EBITDA.
"Wall Street's obsession has been with net subscriber adds," Entner said. "But more carriers are looking at the bottom line, at profitability."
Improving that bottom line will be tough, analysts say. Marketing costs are rising as carriers open more retail stores to bring in customers.
T-Mobile, owned by Germany's Deutsche Telekom, posted a $366 million operating loss in the first half. It expects strong third-quarter subscriber growth, though.
Sprint PCS had a net loss of 78,000 customers in the third quarter, saying it purged its rolls of nonpaying subscribers. It had added 1.24 million a year earlier. But PCS, which reported earlier this month, narrowed its third-quarter loss.
Then there's Cingular, a joint venture of SBC Communications Inc. and BellSouth Corp. Earlier this month, it said it lost 107,000 customers in the third quarter vs. a net gain of 95,000 a year earlier. Its pretax earnings fell 43% to $296 million.
In September, Cingular rolled out new rate plans enabling customers to roll over unused air time into the next billing period. Yet T-Mobile and others still charge less than Cingular, analysts say. "One of the lessons for Cingular is that rollover is a (product) differentiator," said Entner, "but price is still king."
On Wednesday, AT&T Wireless said it added 201,000 subscribers in the third quarter, down from 748,000 a year earlier.
Both AT&T Wireless and Cingular point to bankrupt Worldcom Inc. as a source of problems. A wireless reseller, WorldCom rented capacity on other networks. When WorldCom ended service this summer, AT&T Wireless and Cingular tried to retain its former customers. In AT&T's case, only about half - 300,000 subscribers - moved over.
To reach its goal of adding 2 million subscribers in 2002, Mallitz says, AT&T Wireless needs to add 730,000 more in the fourth quarter.
"I'm not sold," he said. "They're a little ahead of themselves."

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