Comments on Recent Nextel Stock Price (lenghty):
Disclaimer, I am long Nextel stock. Also, I own August 35 Calls. I don't believe anything I say below will significantly affect the stock price.
After the last few days, some of us may be wondering why we bought into this company in the first place. I am writing this to review Nextel's curernt status, and for comments from others.
1) Al Gutkin (along with Ed and Ken TA posters) is very close to being claimed a current guru, for calling $26 when the major tone of this board was for high $30's - low $40's by now (myself included). Congratulations, Al. How did you do it?
2) Overall market has been choppy. The telecom service provider sector has been correcting after a first quarter run-up, as detailed on the Yahoo! board. Nextel seems to be one of the higher percentage corrections in that sector.
3) AT&T announced a new no-roaming charge, $0.10 / minute long distance rate today. The details of the rate structure have surely been in the works for a while, so it is possible that news had leaked
out; or, some had advance knowledge of the news release. Read the release at:
infoseek.com
Nextel is specifically mentioned as a competitor that prompted the new rate plan(s). Long-term this is a great confirmation of Nextel's recognition as a player in the industry. Note that AT&T stock dropped today, but not as much percentage as Nextel.
4) We hear some reports of bad (dropped) call service and / or customer service. Although not desirable, these kind of problems are normal for a growth company. The 10K states that Nextel is aware of the problems and attempting to resolve them.
There are several pieces of news which are slightly negative toward Nextel: a) the Southern California lawsuit for several millions dollars, b) four SMR operators are merging for a national (but not seamless) presence, and 3) the Brazil deployment is delayed by a month or so due to death of an official there.
These items seem fairly minor and I do not know of any other recent bad news or other factors in the industry that pose any special threat to Nextel. In fact, from what I see and read, Nextel is continuing with great growth. There is the possibility that some negative news may be forthcoming (maybe at the meeting), but it doen't seem likely. (See #5). I don't expect Nextel to take the entire market share, and it seems to be doing very well with its growth rate.
5) Nextel article, Investor's Business Daily, May 7, page A8. The tone of the article seems to be overall positive. The main negative item mentioned is the debt, of which we are aware. The ARPU and growth rate is highlighted. Also, "Nextel has ambitious plans. It's targetting white-collar corporate users. It's also aquiring more radio spectrum. "We'll be an interesting company to watch in the next six to twelve months" Akerson said. ... Nextel's voice quality is now on par with other cellular networks, analysts say ... Nextel has a strong differentiated product because of DirectConnect ...new i1000 phone due out later this year .... year 2000 year-end subscribers estimated at 5.07 M (from chart)". Discussing the Nextband (LMDS) spectrum, a note was made that Akerson wouldn't really comment, but the writer mentioned that Nextel could be going after the high-speed data or wireless Internet market. (We know that spectrum has to be used for something; I believe Nextel / Nextlink / Teledesic have something brewing).
6) I am long Nextel, and am holding my shares. I was not born to be a trader, and feel extremely confindent of the long-term prospects of Nextel. If I had the money, I would be buying more shares at this price.
7) Craig McCaw has committed a lot of his own money to Nextel. This is a MAJOR reason in and of itself to buy into the company. McCaw has a lot more insight into this industry than I do, and from everything I've seen about him (and family), he knows what he's doing. In fact, I would actually appreciate any instances anyone knows of where McCaw has made a major financial committment and lost. Maybe more importantly, McCaw has, in interviews, revealed a vision of GLOBAL proportions, which goes far beyond what we see of Nextel today.
Rob |
