PT: Keep em coming. Lets add another level....
>>Fundamentals:
1. Sales are booming. Nextel added more new subscribers than all other
cellular companies.
+++ Sure. Nextel was first to market the digital cellular on a large
scale. This window of opportunity, if still open, is closing fast.
*** You keep pointing to Nextel's basic cellular offering as if its the core of their product. Digital cellular does not address the same communication "opportunities" offered with Direct Connect.
Let's cut to the chase PT. Do you use Nextel's service? Have you seen it in action? Let's shift the focus where it belongs - value-added service, ease of contact, getting in touch for the basic things you need, group conferencing - ALL THIS IN A 100% business mode.
Nextel's PCS competition is trying to sell the public on existing basic fixed "two-way" chat/conversation. That's fine, but we've been there, done that.
2. They have the only proprietary wireless digital network. It is now
75% completed and they are in all of the largest markets and cities.
They will have coverage of 98% of the US population.
+++ Being proprietory and as a consequence dependent on a single
technology supplier is a curse, not a blessing. Coverage is one variable of the equation, bandwidth is another. Nextel owned spectrum is fairly narrow (10-15MHz) and non-contiguous.
*** First, lets deal in facts. iDEN technology is not proprietary. Motorola has released the specs to the world. Thus we have an open platform which other providers can compete for business on. MOT will make more money in the add-on infrastructure buildout business as more players come on stream than they ever would with handsets alone.
Also, you totally ignore the biggest plus - the onging and growing value of having the ONLY nationwide all-digital network in the business - NOW, not 6 mos to 2 years from now.
3. Their cellular telephone has more function that any other cellular
elephone.
+++ It is heavier and costs more.
*** "Costs more...?" in reference to what? Do you know what market Nextel is serving - the business market. And when you add up all the costs and bennies - even in todays environment Nextel SAVES MORE AND MORE AND MORE..... Handset costs are irrelevent when you pitch a total cost of ownership approach. Nextel is not serving the retail market where handsets are relevant.
4. They own the high-end of the business.
+++ What business? At best, they are a leading SMR operator. Much like
the long-distance business, the digital cellular one is owned by noone, and the competition there is going be just as, if not more, intense.
*** There you go again - pointing over to digital cellular. Sure its part of Nextel's package, but not their main focus. Nextel is not just an SMR operator. Nextel is a communications network, period.
5. They have the lowest cost of sales than any other provider. That
means they can be price competitive. My opinion is and has been that
they are the low cost provider for the business community or the high
usage customers. For example, their no roaming fee policy saves huge
money to businesses and cannot be matched by competion. They are the
only company to round off to the nearest second. They got their specturm cheaper than anyone else. All of this will take market share from others.
+++ Nextel's digital cellular looks good in comparison with "AMPS", but so do most other digital offerings.
*** You avoid the comment on cost of sales. Why are more VAR's signing up to push Nextel's service than ANY other package? Because it sells more than the competition. Have you ckecked you VAR sources lately. They create a very low "cost of sales" channel for Nextel.
6. They will be cash flow positive in about 6 months.
+++ Says who?
*** If you don't know the answer to this then the real question should be: why are you on this thread?
7. They have the best management in the cellular business.
+++ Says who?
*** Ditto!
8. They are in an industry that is growing about 35% each year. Nextel
is getting a nice share of this new business.
+++ What business?
*** Get a life PT - you're fading when you should be closing this argument.
9. They are immune to the Asia flu. They took US infrastructure shots
against the Asia flu.
+++ Erroneous, but also irrelevant.
*** Check, check my son. How certain you sound!!
10. The CEO stated recently that Nextel should be able to add about 1.5 million subscribers each year (they are close to that rate of new
subscriber additions now). Since 2 million makes them cash flow
positive, you can see (if you play the the new subscriber numbers going forward) that they will be going to generate a very large amount of revenue over the next few years.
+++ Then why does Armstrong remain "guardedly optimistics" about
Nextel's future? Extrapolating into the future Nextel's current
subscriber growth and arpu is dangerous.
*** Ok, now you are really out on a limb - resorting to "Armstrong's" quote to solidify your entire arguement. Crumbling fast....
11. Their gross margins and ratio of net income to sales will be larger than most US companies. They have no telephone operators, they do now own the software, etc. ---this is a low maintenance company.
+++ Betrays complete misunderstanding of Nextel's cost structure.
*** Taking away buildout costs, Nextel's gross margins are to salivate over - try somewhere north of 60% on an adjusted basis.
Overall, Nextel bulls appear to be looking into a rear-view mirror. A
lot what they say was true yesterday, may be true today, and unlikely to be true tomorrow. The market is looking 3-6mo ahead, which is reflected in the stock price.
*** Ok the ole "rear-view" mirror statement. That cuddly all-purpose blanket we use when we know little or nothing more in terms of facts to support the foundation of what we are trying to argue. But I will grant you, the market does look ahead. The entire market is discounting the Asian impact right now. It does present a challenge. But you have no grounds of extrapolating this to Nextel's case - unless you bring FACTS to the table.
In Nextel's case we shall see in 3-6 months as this story unfolds.
PT, as we are all coming to see very clearly, you are very short on facts and content. Your erroneous reference from Lehman's research on CDMA is just another example of you reaching.
Let's get real PT. We want you back, but bring the goods.
Good luck! |
