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Technology Stocks : NEXTEL
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To: Al Gutkin who wrote (5885)4/28/1998 4:13:00 PM
From: Ken Benes  Read Replies (3) of 10227
 
Al:

Nextel is currently hostage to the market. As a highly leverage play, nextel will react to the systemic moves in the market regardless of the fundamentals of the company. Without any earnings, the only way to value nextel is the price to book, ARPU, and cash flow. To price the company to future cash flows is difficult because should stock prices decline, multiples used for such calculations may change.
One thing is certain, nextel has lost its momentum. This will make it exceedingly difficult to reach the 46+ level this summer. Without this upside potential, nextel carries more risk than a stock with good earnings increase.
What can change this scenario? Continued strength in the economy and the markets with low interest rates; continuation of record levels of add ons; good numbers from its overseas operations; and finally increasing debt as little as possible.
The current environment of very high valuations that may be correcting is not the best environment for a startup.

Ken
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