Like I said in my earlier post, anything wireless seems to lose money. However, I don't work in that area like you do. The article below by Cramer seems to support my thesis that wireless is short on profit. In the article, he talks about PCSA which I believe is a wireless reseller out of Atlanta. PCSA is dropping money like its candy.
Again, I ask, can you supply me with at least one company that makes money in this arena? TIA.
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Airgate PCS Opens the Barn Door on Wireless
By James J. Cramer
06/06/2002 03:08 PM EDT
Never heard of Airgate PCS (PCSA:Nasdaq - news - commentary - research - analysis) until this morning. I mean it -- I had never heard of it. But it is taking the wireless world apart today and there is no sign that things are going to get better before they get worse.
If you don't know Airgate, it is a network partner of Sprint PCS (PCS:NYSE - news - commentary - research - analysis). It said that it was going to add 35,000 to 40,000 customers at the end of April. Now it is going to add 22,000 to 27,000. That, frankly, is cataclysmic. The company is trying to say that the problems started because it instituted a deposit and if it hadn't instituted a deposit ($125), the falloff wouldn't have occurred.
But think about it; the only reason a company would require a deposit is because too many people were kiting the company. So something that makes good business sense can't suddenly also make bad business sense.
The slower "adds" means that Airgate will have debt covenant problems.
That's why everything wireless (including the pinata Conexant (CNXT:Nasdaq - news - commentary - research - analysis), the cell-phone partsmaker that I own) is getting killed.
This news is dreadful for all cell-phone companies and particularly horrific for the "mid-cap" wireless companies, which have oodles of debt. Western Wireless (WWCA:Nasdaq - news - commentary - research - analysis), Triton PCS (TPC:NYSE - news - commentary - research - analysis), Centennial Communications (CYCL:Nasdaq - news - commentary - research - analysis) and Alamosa Holdings (APS:NYSE - news - commentary - research - analysis) all have more debt per pop than PCSA, so they are all candidates for sale if you haven't sold them already.
US Unwired (UNWE:Nasdaq - news - commentary - research - analysis), UbiquiTel (UPCS:Nasdaq - news - commentary - research - analysis), US Cellular (USM:NYSE - news - commentary - research - analysis) and Nextel Partners (NXTP:Nasdaq - news - commentary - research - analysis) are all getting roiled in the chaos, too.
I know this is going to sound alarmist, but I question whether any of these companies can make it. Any of them.
Look, I own Verizon (VZ:NYSE - news - commentary - research - analysis), and I am worried about Verizon, although not nearly to the extent of any of the other companies in the sector. Wireless has not hit bottom. It won't until there are three or four wireless companies in the country.
Period. |
