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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: cfoe who wrote (13383)	7/27/2001 1:42:11 PM
From: cfoe	Read Replies (2) \| Respond to of 196617

Good article on Sprint PCS from earlier in the week. (Sorry - link not possible) Sprint PCS (PCS) rings up growth 2001-07-24 by Dave Sterman, equity research columnist For wireless phone service provider Sprint PCS (PCS), the timing of our nation's economic slowdown couldn't have been better. Had it started a year earlier, the company would have faced a serious financial threat from massive losses piled onto a weak balance sheet. Instead, the company had enough time to build a critical mass of customers that helped it to survive a downturn. And if second-quarter results are any indication, Sprint PCS is on its way to becoming quite profitable. That's because much of the company's infrastructure is already built out and even small additions of new subscribers yields a large jump in incremental profits. Analysts were unanimously effusive in their praise. Operating "metrics were absolutely fabulous," says Deutsche Banc Alex. Brown's Jeffrey Hines. In his July 20 institutional research report, he added that "Sprint PCS's recent results had already moved it to the top of the class in terms of operational performance." Based on a discounted cash flow (DCF) analysis, Hines sees PCS more than doubling to $55. Other analysts saw the quarter's results as a good omen for the entire sector. "Sprint PCS' results help to support our theme that wireless is continuing to grow despite economic slowdowns," noted CS First Boston's Cynthia Motz in an institutional research report July 19. Tucker Anthony Sutro's Thomas Friedberg concurs, adding that the quarterly results "spotlighted the leveragability not only (of) PCS' business model but those of the 'Big Six' mobile Wireless Oligoply as well." That operating leverage was indeed in sharp evidence in Sprint PCS' June quarter. A year ago, the company eked out just $11 million in EBITDA (earnings before interest, taxes, depreciation, and amortization). That figure grew to a massive $491 million this quarter, roughly 40 percent ahead of consensus estimates. A 51 percent jump in subscribers gets some of the credit, but analysts cite a host of other factors for the cash flow surge as well. In a July 20 report entitled "Can You Believe Those Numbers!" Merrill Lynch's Linda Mutschler found that customers are increasingly sticking around, minimizing churn to a company record low of 2.2 percent. And those customers are spending an impressive $61 per month, known in the industry as ARPU (average revenue per user). Tucker Anthony's Friedberg thinks the ARPU figure is quite telling. "This quarter suggests that ARPU may be somewhat inelastic in a recession or soft economic times," he wrote in his July 23 report. He rates PCS as a "buy" and sees it rising from a current $25 to $41.35. On the basis of future cash flows, he sees the stock worth nearly $70. But since Sprint Corp.'s (FON) ownership stake effectively limits the potential for a third party acquirer, he applies a steep 40 percent discount to his valuation of the company. To be sure, Sprint PCS still needs to raise more dough to complete its network. The company has plans to spend $3.4 billion this year in capital expenditures and billions more over the next few years. With its balance sheet already weighed down with $14.3 billion in long-term debt, the company is turning to equity markets, with plans to sell $3 billion in stock later this year. In his July 20 note, WR Hambrecht's Peter Friedland points out that "the company might also consider asset sales (i.e. some of the company's radio towers) to meet its funding requirements. In the report available to retail investors, the analyst, who rates the stock a "buy," has a more modest $32 price target, although he declines to divulge how he arrived at that figure. Merrill's Mutschler also declines to cite the rationale for her $36 price target on the stock. In contrast, CS First Boston's Motz provides a fairly straightforward path to her price target. In the institutional report, she sees Sprint PCS garnering $1.77 billion in cash flow. That figure should rise steadily until 2010, according to her math. Applying a multiple of 13 to that 2010 EBITDA figure, using a 12 percent discount rate, and then a 20 percent private market value (PMV) discount, she sees the stock rising to $48 over the next 12 months. Regardless of their specific target prices, analysts universally agree that PCS is set to rise further in the months to come.

To: cfoe who wrote (13383)	7/27/2001 1:44:32 PM
From: foundation	Respond to of 196617

RE: Nextel - Interesting that there wasn't any mention of Nextel switch to 1X on the call ---------- Nextel on 1X I just finished listening to the Nextel CC. This is what they had to say about the 1X overlay. They have received responses from multiple vendors to their RFP. Pricing is better than expected. They think the 1X buildout will be less expensive than they had previously expected. They feel very good about the reponses and presentations they are getting from the vendors. They have cleared spectrum for the 1X networks. They have cleared 10Mhz, the upper 200 iDen channels, for 1X. The are 99% complete in the spectrum clearing. They do not expect a dual mode iDen/1X handset. The will use a 1X only handset. They plan rapid rollout that will make a dual mode mode handset unnecessary. They are still sifting through thae vendors' proposals. Their will be more specific info about their 1X buildout at the fourth quarter CC. Message 16119026