NXTL: Closes Microsoft Transactions
Bankers Trust Research/BT Alex. Brown Research
Jeffrey Hines,Bo Fifer
May 27, 1999
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NEXTEL COMMUNICATIONS INC. [NXTL] "STRONG BUY"
Closes Microsoft Transaction
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Date: 05/27/1999 EPS 1998A 1999E 2000E
Price: 34.63 1Q (1.53) (1.66)A (0.92)
52-Wk Range: 43 - 15 2Q (1.94) (1.37) (0.88)
Ann Dividend: 0.0 3Q (1.56) (1.16) (0.80)
Ann Div Yld: 0.00% 4Q (1.43) (1.06) (0.65)
Mkt Cap (mm): 13,194 FY(Dec.) (6.46) (5.25) (3.25)
3-Yr Growth: FY P/EPS NM NM NM
CY EPS (6.46) (5.25) (3.25)
Est. Changed Yes CY P/EPS NM NM NM
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HIGHLIGHTS:
--Nextel announced Friday (28-May) that it had received $600 million from
the previously announced transaction with Microsoft (announced 10-May).
--Microsoft has received approximately 16.67 million shares of Nextel,
which represent approximately 4.4% of the fully-diluted shares
outstanding.
--We would expect that this announcement will result in several Internet
related events going forward, e.g.,
* Nextel should begin testing Nextel Online later this year which should
enable Nextel subscribers to use their wireless phones (i1000plus from
Motorola) to access information via the Internet/Intranets.
* Microsoft Windows CE likely will ultimately find itself in the
i1000plus, which today currently carry an Internet browser from Unwired
Planet.
--The net-net is that we expect Nextel to be the first wireless company in
the U.S. to roll-out packet based wireless data services on a large
scale to broad subscriber base. As such, we continue to see Nextel as
operating at the head of the PCS wireless class, a class that Nextel has
ranked #1 (based on our 5-metrics of value) in four the past five
quarters.
--Reiterate "strong buy" investment rating on NXTL. Based on our DCF our
12-month price objective is $51/share. |
