Reuters Business Report
Nextel: Might Exceed 2002 Cash Flow Goal
RESTON, Va. (Reuters) - Nextel Communications Inc., the No. 5 U.S. wireless telephone
company, on Tuesday said it might exceed its 2002 cash flow goal, citing recent strength in
monthly revenue and subscriber additions.
Nextel (NasdaqNM:NXTL - News) shares surged as much as 15 percent
following the company statement and were up 49 cents, or nearly 13
percent, at $4.28 in active late-morning trade on the Nasdaq.
Guzman & Co. analyst Patrick Comack said investor were relieved that
Nextel was not seeing the same weakness AirGate PCS Inc.
(NasdaqNM:PCSA - News) reported last week.
AirGate, which sells wireless service under the Sprint PCS Group
(NYSE:PCS - News; NYSE:FON - News) brand name, on June 6 spooked
investors already jittery about slowing growth in the wireless industry when
it lowered its projections for the number of subscribers it expected to add in
the June quarter.
"The (Nextel) stock's been beaten down severely along with the other
wireless stocks due to the AirGate situation," Comack said. "People were
throwing out the baby with the bath water."
Nextel repeated its forecast for 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) -- a measurement
of cash flow -- of at least $2.5 billion, with 2 million domestic subscriber additions.
Cash flow is a rough indicator of whether a company is generating enough cash from operations to meet its debt obligations, a
major concern among telecommunications companies, and planned capital expenditures.
The average Wall Street EBITDA estimate for Nextel is $2.56 billion, with estimates ranging from $2 billion to $2.78 billion,
according to Multex.
"Our average monthly service revenue is tracking ahead of expectations for the (second) quarter," Nextel Chief Financial Officer
Paul Saleh said. "Furthermore, we are achieving greater operating efficiencies yielding strong EBITDA growth and margin
improvement. If these trends continue, Nextel will likely exceed our expectations for 2002."
The Reston, Virginia-based company said in April and March that it expected 2002 EBITDA of $2.5 billion and a total of 2 million
new subscribers. In April it reported first-quarter EBITDA rose 66 percent from a year earlier, to $586 million.
Nextel said in April it added 502,000 new subscribers in the United States in the first quarter and finished the quarter with 9.2
million domestic subscribers.
Email this story - Most-emailed articles - Most-viewed articles |
