An article with a positive Nextel spin:
biz.yahoo.com
Morningstar.com
Wall Street Rages Unfairly on Nextel Shares
By Todd P. Bernier
What Happened?
Wireless phone operator Nextel (Nasdaq: NXTL - news) reported Thursday that it added 540,000 new subscribers in the September quarter, missing analysts' targets--and management's guidance--by roughly 10,000 subscribers. Nextel's stock price dropped more than 12% for the day.
What It Means for Investors
The market's reaction to this news, coming on the heels of disappointing performances by several other high-tech blue-chip firms, was predictably--and unfairly, we think--harsh, causing Nextel to shed roughly $3 billion of its market capitalization Thursday. We believe that long-term investors should ignore the trigger-happy types on Wall Street and start loading up on Nextel at these discounted prices.
Although the company missed its target for September, 540,000 new subscribers nevertheless represents growth of almost 9% from a base of 6.2 million. Considering that each subscriber is worth about $3,700 over his or her lifetime, the 10,000 new customers that Nextel didn't add during the quarter would have had a revenue value of only $37 million. Even if we apply an inflated price/sales multiple of 10 times--Nextel currently trades at just 7.5 times trailing-12-month revenue--we only get to $370 million in lost value, a far cry from the amount vaporized today. The frantic selling of Nextel shares is even more perplexing in light of the fact that the company is an obvious takeover target for an acquisition-hungry telecom like WorldCom (Nasdaq: WCOM - news) or AT&T Wireless (NYSE: AWE - news). |
