Next Level jumps 23 percent on Qwest hopes
NEW YORK, Oct 31 (Reuters) - Shares of equipment-maker Next
Level Communications Inc. jumped 23 percent on Tuesday amid
hopes of an expanded contract with key customer Qwest
Communications International Inc., traders said.
Rohnert, Calif.-based Next Level's VDSL (very high-speed
digital subscriber line) equipment turns traditional telephone
lines into high-speed pipes able to transmit television,
data and voice services.
Qwest (NYSE: Q) told analysts in a meeting on Tuesday that
Next Level has been making progress in cutting the costs of
its products. Qwest previously had said it would not expand
VDSL beyond the test market in Phoenix until the the cost to buy
and install the equipment fell.
Qwest did not comment on any specific plans. Still, its comments
about shrinking equipment costs were viewed as a sign that
the data and telephone services company may buy more Next
Level equipment, traders said.
Shares of Next Level (NASDAQ: NXTV), which is majority-owned
by Motorola Inc., gained $8, or 22.9 percent, to $43 on Nasdaq.
Shares of Motorola gained $1-5/8, or 7.22 percent, to $24-1/8
on the New York Stock Exchange.
U S West Inc., the local telephone company Qwest bought
this summer, had been a big proponent of VDSL services and
had aimed to expand the service to about 10 cities. During
the Qwest-U S West merger, however, Qwest put those expansion
plans on hold until the cost concerns could be addressed.
In the next few weeks, Qwest is expected to announce plans
to launch VDSL services in Denver, sources familiar with
the situation previously said. Additional expansion plans
may be announced in the first quarter, they said.
Qwest declined to comment on its specific plans.
"If you can get the economics of the product to work, the
name of game is that you sell it to everyone possible ... I
think we're looking at a 8-10 (market) strategy if we get
the product to work," Qwest Chairman Joe Nacchio told
analysts.
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