Rating: BUY Change: None 12-Mo. Target: $30-35
"This morning, LTBG announced that its CFO, Joe Tibbetts, has resigned in order to pursue an opportunity in venture capital. Tibbetts will remain with the company through the end of this month. The search for a new CFO is currently underway, as the company is aiming to hire a new CFO in the next 6-12 weeks. We are not too surprised by the resignation, given the exodus of many communications executives to the VC world. However, we believe that the uncertainty surrounding the CFO position may result in a near term cloud in the stock until a successor is named. The fundamentals remain strong, driven by robust wireless industry trends. With current penetration levels at roughly 28% in the U.S., the wireless industry continues to outperform even the most aggressive forecasts. In addition to strong user growth, the landscape is increasingly competitive with continued high churn rates due to competitive pressures. We believe that wireless penetration will continue to soar in 2000, with declining prices and enhanced services (such as wireless Internet) serving as catalysts for additional activations. In addition, we believe that already high churn levels may increase, with 2 new national competitors (Voicestream/Omnipoint/Aerial and BAM/AirTouch/GTE/PrimeCo) poised to commence combined operations later this year. Furthermore, carrier differentiation is increasing due to variable reliability in certain locations and branded Internet offerings such as Sprint PCS' Wireless Web. More significant, LTBG is set to begin conducting activations in the relatively underpenetrated Brazilian market in the second quarter. We reiterate our buy rating and $30-$35 target price."
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