NEXTEL posts smaller-than-expected loss
UPDATE 2-Nextel posts smaller-than-expected loss
(Recasts, adds details in paragraphs 3, 8-11,13,15,16-17,21, adds byline)
By Jessica Hall
NEW YORK, April 26 (Reuters) - Wireless telephone company Nextel Communications Inc. (NasdaqNM:NXTL - news) on Wednesday posted a smaller-than-expected first-quarter loss on strong U.S. subscriber growth and it raised its customer growth forecast for the rest of the year.
Reston, Va.-based Nextel's loss, excluding one-time charges, was $279 million or 83 cents a share, compared with a loss of $439 million or $1.66 a share a year ago.
The results were better than the loss of 95 cents a share expected by Wall Street analysts, according to research firm First Call/Thomson Financial. Revenues jumped 63 percent to $1.08 billion, compared with $664 million a year ago.
Shares of Nextel jumped 7-11/16 to 119-1/4 on Nasdaq. The stock has nearly tripled over the past year.
Nextel's current first quarter loss attributable to common shareholders, including charges for the early retirement of debt and conversion of debt securities, was $435 million or $1.17 a share.
The company, which serves mostly high-spending business customers rather than consumers, added 634,000 new subscribers in the first quarter, bringing its total subscriber base to 5.6 million customers.
The strong subscriber growth included a record 540,300 new U.S. subscribers, which exceeded the company's forecast of 450,000 to 475,000 new customers.
Due to strong market demand and accelerating customer interest, Nextel said it expects to add more than 500,000 new U.S. subscribers per quarter this year, above its previous estimate of up to 475,000 new subscribers per quarter.
``The results were strong. The net additions show the significant spreading of acceptance of Nextel's products and the expansion of its distribution network,'' said Bear Stearns analyst David Freedman.
Nextel's telephones offer a two-way ``walkie talkie'' feature, in addition to traditional wireless services, that appealed to traditional blue collar industries such as construction or landscaping.
Nextel, however, has been working to expand its customer base. White-collar customers now comprise nearly 30 percent of its customer base and that market is the fastest-growing segment of its customer base.
``For the fifth consecutive quarter, Nextel has attracted greater net additions while maintaining the highest subscriber quality in the industry,'' said Nextel Chief Financial Officer Steve Shindler.
Nextel said it expects its average revenues per subscriber remain at the industry-leading $72 a month level seen in the first quarter. Analysts had expected its average revenues to be about $70 a month this year.
Customer turnover, or churn, was about 2 percent a month.
To support the soaring subscriber growth, Nextel's domestic capital spending rose to $661 million, up 76 percent over the year-ago levels. Capital spending, however, fell from $684 million in the fourth quarter of 1999.
Some analysts expressed concern about Nextel's year-over-year increase in capital spending.
``Subscriber growth was very strong ... revenue growth was exactly in line. They're executing on the growth side (but) we're just very concerned about the dollars being sent to achieve that growth,'' said ABN AMRO analyst Kevin Roe, who rates the stock an ``underperform.''
Nextel has been expanding its product line to include wireless data services and international roaming, which allows customers to use one phone and one number in more than 65 countries.
Earlier this month, Nextel announced the launch of its Nextel Online and wireless Internet services in 45 major markets and more than 750 cities across the country.
Nextel ended the first quarter with about 1.9 million data-capable handsets in service, which among other features, can receive and send e-mail.
Nextel reiterated that it aims to participate in the upcoming auctions of wireless licenses that would help it add new services or explore new business opportunities. The company said it has about $8 billion in available funding and financing |
