Following is a list of debt and credit upgrades and downgrades for wireless companies by financial and investment firms this week.
- Merrill Lynch upgraded its rating on Freescale Semiconductor from neutral to buy, saying the company is improving its margins even though revenue growth is still modest. Merrill Lynch said Freescale commands a significant share of the market for automotive integrated circuits, communications processors and wireless infrastructure ICs, and it said the company has the potential to significantly expand its position in wireless handset semiconductors.
- Prudential upgraded L.M. Ericsson from underweight to overweight. The firm said the Swedish vendor could begin to benefit from a W-CDMA uptick in the second half of the year.
- Smith Barney Citigroup upgraded Infineon Technologies from hold to buy, saying DRAM pricing will bottom out soon, and it expects several catalysts to favor DRAM manufacturers.
- Merrill Lynch reported findings from its meeting with 16 Asia-Pacific telecom carriers. The firm said core mobile access technologies are currently being deployed in Asia in parallel with the rest of the world, whereas Asian carriers previously led W-CDMA and EV-DO deployments. Merrill Lynch noted three exceptions: TD-SCDMA technology in China, WiBro broadband technology in Korea and digital multimedia broadcasting also being deployed in Korea. The firm said Asian carriers face increasing risks from deploying nonstandard technologies. Merrill Lynch also said investors should anticipate steady growth in mobile data revenues in the region.
- Standard & Poor’s said its ratings on Nortel Networks Ltd. will remain on CreditWatch with developing implications despite the company’s announcement that it plans to acquire PEC Solutions Inc. for $448 million. Nortel’s ratings were placed on CreditWatch in April 2004 due to uncertainty surrounding the company’s financial reporting. S&P said the acquisition would have a small positive effect on Nortel’s pro forma operating results. PEC provides government IT services.
- Merrill Lynch initiated coverage on Alaska Communications with a neutral rating. Merrill Lynch said the company’s wireline declines will be offset by wireless growth, but that the company’s recent share gain in wireless is unsustainable in the long run.
- Pacific Growth Equities lowered its rating on NetEase.com Inc., saying the company faces a variety of negative pressures, including deterioration in wireless revenues. The company’s wireless business accounts for only 6 percent of its revenues, according to Pacific Growth Equities.
- Standard & Poor’s affirmed its A/A-1 corporate credit rating on Telefonica SA following an announcement from the company that it is committed to deleveraging and because it withdrew from the bidding process for Turk Telekom. S&P also removed the Spanish operator’s ratings from CreditWatch where they were placed with negative implications at the end of March.
- Robert W. Baird lowered its ratings on headset maker Plantronics from outperform to neutral, saying the company’s Bluetooth product transition is taking longer than expected. However, Baird said the long-term outlook for the company remains positive, particularly for the wireless market.
- First Albany Capital downgraded its rating on InfoSpace Inc. from buy to neutral. The firm said the company’s second-quarter guidance was surprising, and its confidence in InfoSpace’s ability to meet full-year estimates is low. InfoSpace reported financial results that came in below analyst expectations.
