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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

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To: Ramsey Su who started this subject	10/15/2001 1:11:51 PM
From: foundation	Read Replies (1) of 197414

NEXTEL CONTINUES PURSUIT OF CDMA 1X DEPLOYMENTS by Lynnette Luna Telephony, Oct 15, 2001 Debt could hamper upgrades Nextel Communications still plans to deploy CDMA 1X technology despite revealing earlier this month that it would upgrade its existing technology to allow for more voice capacity and higher data speeds. Sources close to Nextel say the company has not pulled back any of its requests for proposals from CDMA vendors. But the company's official plan to move to CDMA technology was stymied by the potential capital costs involved in upgrading the network when it is already highly leveraged with debt. “What we are doing is aggressively studying what our 3G path will be, and that is separate and apart from the iDEN announcement,” said a Nextel spokeswoman. Through a deal with its sole vendor, Motorola, Nextel expects to offer packet data speeds between 60 and 70 kb/s by 2002 and double its voice capacity by 2003 on the existing iDEN network. “They had no choice,” said Timothy O'Neil, wireless analyst for SoundView Technology Group. “There is no additional spectrum for them to buy, and they don't have enough money to deploy a [CDMA] network if they did have the spectrum.” Nextel's balance sheet is laden with long-term debt (see figure below). NEXTEL'S DEBT STRUCTURE Additional borrowing availability ($1.5 billion) Cash and short-term investments ($4.7 billion) Preferred ($2 billion) Domestic long-term ($13.7 billion) International long-term ($1.7 billion) Source: Merrill Lynch At the end of June, it had $16 billion in debt and will have a negative cash flow of about $2 billion this year, according to Morningstar. Investors didn't want to see Nextel spending a lot of money on technology upgrades, and Nextel has guided the investment community to essentially flat domestic capital expenditures in 2002 and 2003. “We are pursuing and looking at all of our options for acquiring more spectrum,” said the Nextel spokeswoman. “But we have found it necessary not to participate in auctions that are the high-stakes kind.” industryclick.com

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