<font color=black>How Wall St. operates - check out this excerpt...
The stock has dropped 94 percent in the past year, compared with a 63 percent drop in Sprint PCS, which slid $1.79, or 18 percent, to $7.99. In the past 12 months, 36 analysts gave ``buy'' ratings to Sprint PCS, the highest number given to any U.S. company, according to Bloomberg data.
Can you say "Pump and DUMP!"? JMHO. Rob
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AirGate PCS Falls After Customer-Growth Forecast Cut (Update7)
By Lisa Levenson
06/06 18:11
Atlanta, June 6 (Bloomberg) -- Shares of AirGate PCS Inc. fell 67 percent after the wireless-telephone company reduced its forecast for new subscribers, dragging down shares of carriers such as Sprint Corp.'s PCS Group and AT&T Wireless Services Inc.
Wireless stocks have plunged on concern about slumping subscriber growth and network-upgrade costs, with the Barclays Capital Wireless Index declining 83 percent from its March 2000 peak. U.S. mobile-phone companies will see customers increase 14 percent this year, the slowest rate since the industry was founded in 1985, Prudential Securities Inc. has said.
Standard & Poor's said it may lower a ``B-'' credit rating on AirGate, which had $619 million in debt on March 31. AirGate and lenders are discussing amending a credit agreement because the company may not meet minimum subscriber levels in the Midwest, a region it entered with the purchase of iPCS Inc. last year.
``No one assumed that there'd be problems on the (iPCS) acquisition side,'' said Jeff Osborne, an analyst at Munder Capital Management, which doesn't own stocks of wireless carriers because of concerns about debt levels and cash-flow growth.
Atlanta-based AirGate expects to add 22,000 to 27,000 customers in the third quarter, down from a previous forecast of 35,000 to 40,000. The company, which is unprofitable, sells wireless service under the Sprint PCS brand in smaller U.S. markets, such as Columbia, South Carolina.
AirGate is reinstating deposits for new customers with poor credit. The deposits mean fewer new customers are signing up, the company said yesterday.
New Services
Wireless carriers are spending billions of dollars to improve networks for new services as faster Internet access, though demand may not meet expectations, said Donna Jaegers, an analyst at Invesco Funds Group Inc. To reduce expenses, analysts expect companies will merge after government rules limiting control of airwaves are lifted on Jan. 1, 2003.
In addition to AirGate and iPCS, other Sprint PCS affiliates that operated in different geographic regions have combined to cut costs. Osborne expects that will continue.
``It would be a lot easier 12 to 18 months from now if Sprint were to be able to buy three or four affiliates, as opposed to 10,'' he said. ``Eventually, the affiliates will all get together, since the business as a whole is in dire straits'' and they need to pool resources, Osborne said.
Pricing competition among wireless carriers has led as many as one in three customers to switch carriers every year, industry statistics show.
``These companies are cannibalizing each other's business,'' said Billy Bowden, a managing partner at Dallas-based hedge fund Crown Capital LLP, who said he's avoiding wireless stocks.
Shares Tumble
Shares of AirGate tumbled $5.65 to $2.75 in trading of 17 million, more than 25 times the three-month daily average. They are down from a high of $114.50 in April 2000.
The stock has dropped 94 percent in the past year, compared with a 63 percent drop in Sprint PCS, which slid $1.79, or 18 percent, to $7.99. In the past 12 months, 36 analysts gave ``buy'' ratings to Sprint PCS, the highest number given to any U.S. company, according to Bloomberg data.
It is unlikely banks will try to seize AirGate's assets, Banc of America Securities LLC analyst Steve Yanis said in a report. He cut his rating on the stock to ``market perform'' from ``buy.''
Rating Cuts
Analysts at 10 other brokerages, including Legg Mason Wood Walker Inc., J.P. Morgan Securities Inc. and Thomas Weisel Partners LLC, also reduced their ratings on AirGate shares.
Shares of AT&T Wireless, the third-biggest U.S. mobile-phone company, fell 58 cents, or 7.3 percent, to $7.40. The Barclays wireless index declined 8.5 percent to 115.65.
Alamosa Holdings Inc., US Unwired Inc. and UbiquiTel Inc., which also sell Sprint PCS service in smaller markets, tumbled, too. Alamosa fell $1.16, or 32 percent, to $2.49. US Unwired declined $1.05, or 21 percent, to $3.90, and UbiquiTel plunged 48 cents, or 35 percent, to 91 cents.
``The continuing decline in stock prices makes it more likely that lenders will demand additional equity be infused into the companies,'' Banc of America's Yanis wrote. He lowered his ratings on Alamosa and UbiquiTel shares to ``market perform'' from ``buy.''
Sprint PCS, the fourth-largest U.S. wireless carrier, has 10 affiliates in 44 states, four of which are publicly traded, spokesman Dan Wilinsky said. Sprint PCS owns the airwaves they use to transmit calls, and the affiliates pay 8 percent of sales to Sprint PCS for billing and use of the brand.
Sprint PCS, AT&T Wireless and Nextel Communications Inc. all used affiliate programs to help speed construction of their networks in less-populated markets.
quote.bloomberg.com |
