DBAB: NXTL: Bankrupt NextWave Issues No Comment to Nextel's Proposal
Deutsche Banc Alex. Brown - US Equities
Jeffrey L. Hines,Bo Fifer
August 13, 1999
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NEXTEL COMMUNICATIONS INC. [NXTL] "STRONG BUY"
Bankrupt NextWave Issues No Comment to Nextel's Proposal
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Date: 08/13/1999 EPS 1998A 1999E 2000E
Price: 53.13 1Q (1.53) (1.66) (0.81)
52-Wk Range: 58 - 15 2Q (1.94) (1.04)A (0.75)
Ann Dividend: 0.0 3Q (1.56) (1.07) (0.61)
Ann Div Yld: 0.00% 4Q (1.43) (0.96) (0.49)
Mkt Cap (mm): 20,933 FY(Dec.) (6.46) (4.73) (2.66)
3-Yr Growth: FY P/EPS NM NM NM
CY EPS (6.46) (4.73) (2.66)
Est. Changed No CY P/EPS NM NM NM
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Industry: COMMUNICATIONS
Shares Outstanding(Mil.): 394.0
Return On Equity (1998) : 0.0%
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HIGHLIGHTS:
-- On Thursday (11-Aug) NextWave (a company that recently filed for
bankruptcy protection) issued a no comment regarding Nextel's proposed
plans to obtain NextWave's wireless licenses.
-- NextWave did indicate that it was surprised that "two agencies of the
United States government, working in concert, have secretly agreed to
lend their respective regulatory and police powers in support of
Nextel ..." (which we can only suppose that NextWave is not trying to
win any friends in Washington, D.C., but after "defaulting" on close
to $5 billion in bids, we suppose they don't have many left to
offend).
-- NextWave did indicate that it's own proposed plan is scheduled for a
confirmation hearing on 8-Sept-99. Thus, we'd expect to have
additional data points regarding Nextel (and NextWave's) efforts to
secure this spectrum on or prior to 8-Sept.
-- NET-NET: In our opinion, today, NextWave is not a financeable company.
The Company is late to the market and has a questionable "carriers
carrier" strategy. Moreover, we find it quite appalling that
NextWave, which was responsible for bidding up prices in wireless
auctions to incredible price levels, can now have the audacity to lay
claim to these licenses. The fact that the process has gone this far
(to the federal bankruptcy court in New York) we believe should be
taken as an insult to any taxpaying American consumer. Nextel, on the
other hand, has been one of the most innovative and successful
companies in the wireless world. While the current attempt to acquire
these licenses is still unclear, the attempt amplifies Nextel's
premium position in the arena. Any additional spectrum that Nextel
acquires reduces risks, costs and generally causes us to upgrade our
forecasts. We also believe that if Nextel is successful in acquiring
this and/or other spectrum that investors may place a higher valuation
on the stock.
-- Stay tuned. Our 12-month price objective, based on our DCF, on NXTL
is $70/share and does not factor in any additional spectrum gains by
Nextel.
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