Dow Jones reports on merger rumors:
NEW YORK (Dow Jones)--Shares of Nextel Communications Inc. (NXTL) rose nearly
13% Friday amid renewed speculation that MCI WorldCom Inc. (WCOM) might buy the
company and positive comments from Goldman Sachs & Co., analysts said.
"It seems every Friday there's another rumor," said Jeffrey Hines of BT Alex.
Brown Inc. "What's moving the stock today are rumors that perhaps MCI WorldCom
might buy Nextel."
The McLean, Va., wireless-communications company has long been the subject of
those rumors. MCI WorldCom doesn't have a wireless unit, analysts said, and
Nextel's focus on business customers would fit with the long-distance giant's
strategy.
Nextel "is a rare asset in that they're a national and have an international
presence," said PaineWebber analyst Walter Piecyk.
Although Nextel's domestic operations are strong, the company might be
looking for a partner or investment for its overseas business, he said.
Ben Banta, Nextel vice president, corporate communications, declined to
comment on the speculation.
Earlier, the stock rose as high as 38 11/32, past the previous 52-week
ceiling of 35 set a week ago. It recently traded at 37 7/8, up 4 5/16, or
12.8%, on volume of 15.5 million shares, compared with a daily average of 4.8
million.
MORE) DOW JONES NEWS 03-26-99
02:53 PM
Besides the MCI WorldCom rumors, analysts said Nextel's stock gained on
positive comments from Goldman Sachs.
In a research note Friday, Goldman analyst Barry Kaplan set a near-term
share-price target of $40, citing a strong domestic first quarter and
developments in PCS license auctions which recently got under way.
ConnectBid LLC, a company affiliated with telecom financier Craig McCaw, was
the high bidder on licenses in Chicago, Dallas, and Detroit, according to
Kaplan.
Since McCaw is legally prevented from directly competing with Nextel, said
PaineWebber Inc. analyst Walter Piecyk, Nextel "stands to benefit because it
would have first dibs on any licenses McCaw wins."
In his research note, Kaplan said the possibility of combining the broadband
spectrum with Nextel's SMR spectrum addresses "the question of whether the
company has enough spectrum/capacity to accommodate long-term growth."
Lehman Brothers Inc. analyst John Bensche discounted the potential benefits
for Nextel from the license auction.
"They'd be in a totally different spectrum band," he said. "Which would
require a new dual-band phone and the deployment of new rack of antennas."
(MORE) DOW JONES NEWS 03-26-99
03:54 PM
Analysts and traders said Nextel shares also gained on speculation that the
wireless telecommunications company might enter a joint venture with America
Online Inc. (AOL).
PaineWebber's Piecyk said such a deal would help Nextel build its retail
business.
"Nextel could sign an agreement to sell their product online," he said. "It
would answer the question about Nextel's retail distribution and give them some
element of a consumer strategy."
In February, Nextel announced a partnership with Netscape Communications
Corp. to offer Nextel Online, which would enable digital phone users to access
a personalized Internet gateway, send and receive e-mail, and browse the Web.
"AOL owns Netscape so they're in bed with AOL," said Lehman Brothers'
Bensche. "People are getting excited since they have that affiliation already."
AOL officials were not immediately available to comment. Nextel officials
declined to comment on the rumors.
In the options market, traders were looking for Nextel's stock to trade above
40. Nonprofessional traders bought April 40 calls, which gained 1 9/16 to 1
7/8, on volume of 2870, compared with open interest of 1019.
- Marcelo Prince; 201-938-5394
(END) DOW JONES NEWS 03-26-99
04:01 PM
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