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To: im a survivor who wrote (6277)	2/16/2002 2:19:05 PM
From: im a survivor	Read Replies (1) \| Respond to of 13815

Good read.... <<Highly uncharacteristic intraday research release on NXTL and PCS by JPM. Encouraging for longs. Will not be surprised if there is a SB from JPM after the earnings.US Equity Research J.P. Morgan Securities Inc. New York February 14, 2002 Wireless Services Telco Confidence Drop Adds Risk but Lets Outline Facts • PCS and NXTL are trading off sharply today, in large part due to the mounting credit concerns at Qwest, which was unable to rollover commercial paper on Wednesday. • Neither company is facing any imminent liquidity crisis either from commercial paper rollover or other financing needs. In fact, the funding cushion is substantial for both companies. • Sprint still has access to the CP market ($3B outstanding) and rolled over paper even today. We believe, Sprint maintains flexibility in raising capital, enjoying strong relationships with I-Banks and fixed income investors. • NXTL's liquidity position remains $5.2 billion - a $3.4 billion funding cushion. NXTL is not even a commercial or ST borrower and has plenty of liquidity to operate and preserve its capital position. • We hope the market distinguishes fundamentally attractive businesses (with no accounting issues and with real growth) from those companies under siege for questionable practices. We believe PCS and NXTL remain severely undervalued. Portfolio Manager's Summary Sprint PCS and Nextel are trading off sharply today, in large part due to the mounting credit concerns at Qwest Communications, which was unable to rollover commercial paper on Wednesday. Wireless stocks have been riding through an extremely turbulent period, and today’s issue stems from the concerns over the industry’s liquidity, for Sprint PCS and Nextel, specifically. As discussed below, neither company is facing any imminent liquidity crisis either from commercial paper rollover (Nextel has NONE and Sprint Corp, PCS’s funding entity, has been successfully rolling its CP) or other financing needs. In fact, the funding cushion is substantial for both companies. The more troubling issue here is do operating fundamentals matter in this market? Sprint PCS/Sprint Corp – perception is not reality – liquidity solid. Sprint Corp, is the debt financing entity for PCS, is not facing a liquidity crisis. Sprint still has access to the commercial paper market ($3 billion outstanding) and rolled over paper even today. Even as credit markets have not distinguished Sprint Corp compared to Qwest. Source: JPMorgan estimates and Company reports Nextel. $5.2 billion remains Nextel’s liquidity position – a $3.4 billion funding cushion. Nextel is not even a commercial or short term borrower. As shown, this company has plenty of liquidity to operate and preserve its capital position. Figure 2. NEXTEL liquidity 2002 domestic funding requirement -- $1.8 billion Liquidity as of 12/31/01 -- $5.2 billion Credit/bank lines $1.5 billion Cash and other equivalents $3.7 billion Theoretical 2002 cushion $3.4 billion Short term liquidity issues • Commercial paper -- ZERO, not a CP borrower • Principal due -- $47 million Key covenant on bank facility threshold current ---------- ------- • total debt/cash flow (1Q02) 7x 6x Footnotes: **Funding requirement - domestic op FCF breakeven, cash interest/dividends $1.0b, principal $47mm, working cap $430mm, license purchases $400mm Industry fundamentals have not been assessed by the markets here. As noted above, however, while any perception can create a liquidity crisis, we hope the market distinguishes 3 Wireless Services February 14, 2002 New York fundamentally attractive businesses (with no accounting issues and with real growth) from those companies under siege for questionable practices. Sprint PCS and Nextel remain wildly undervalued. >>