Weekly wireless ratings wrap-up

The following information includes details on wireless companies that had ratings changes and information from financial analysts and banking and investment firms this week. Companies mentioned include Qualcomm, Lucent Technologies, Nokia, Ericsson, Motorola, Verizon Wireless, Cingular Wireless, Dobson Communications, iPCS and others.

• Goldman Sachs slightly increased its fiscal fourth-quarter, fiscal 2005, fiscal 2006 and fiscal 2007 earnings per share estimates on Qualcomm Inc. Piper Jaffray also increased its FY’05 revenue and EPS estimates on Qualcomm, but lowered its FY’06 estimates based on lowered W-CDMA handset unit assumptions.

   

• CIBC World Markets lowered its estimates on Nokia Corp. to reflect a more competitive pricing environment for the company. For the year, CIBC expects Nokia’s revenue and earnings per share to come in at $40.3 billion and 94 cents per share vs. its previous estimates of $41.4 billion and $1.07 per share. Third quarter and 2006 estimates also were reduced.

   

• CIBC World Markets raised its estimates on L.M. Ericsson after the company reported second-quarter results. For 2005, CIBC raised its revenue estimates on the company from $18.5 billion and 17 cents per share to $19.6 billion and 18 cents per share. The firm also increased its 2006 revenue and EPS estimates for the vendor. CIBC noted a positive tone from management and said the company’s overall outlook is higher than it previously expected. CIBC also noted Ericsson could experience a small decline in growth during the third quarter due to slower spending from Cingular Wireless L.L.C. and an unresolved Chinese market.

   

• JP Morgan initiated coverage on Dobson Communications Corp. with an overweight rating.

   

• First Albany Capital initiated coverage on Tellabs Inc. with a buy rating and an $11.50 price target. The firm also started coverage on SpectraLink Corp. with a neutral rating.

   

• Harris Nesbitt raised its 2005 its earnings per share estimates for Freescale Semiconductor Inc. from $1.05 to $1.16, and for 2006 from $1.45 to $1.48.

   

• Robert W. Baird lowered its 2005 revenue estimates for Lucent Technologies Inc. to $9.4 billion from $9.5 billion while increasing its earnings per share estimates from 15 cents to 16 cents. RW Baird analysts called Lucent’s quarterly earnings report mixed with revenues slightly below and EPS slightly ahead of its expectations. The company maintained its outperform rating on the vendor. In related analyst action, Prudential Equity Group maintained its neutral weight rating on Lucent following the company’s quarterly report. UBS slightly raised its estimates on Lucent, with 2005 revenues expected at $9.38 billion, up from $9.354 billion. The company predicts 2005 EPS to come in at 18 cents, up from its previous prediction of 17 cents.

   

• Robert W. Baird maintained its neutral rating on headset maker Plantronics Inc. after quarterly results came in slightly below expectations.

   

• Goldman Sachs raised its 2006 revenue and earnings per share estimates on Motorola Inc. following the vendor’s strong second-quarter report. Goldman Sachs raised its revenue estimates on Motorola to $39.9 billion from $37.7 billion, and EPS estimates from $1.21 from $1.15. The firm reiterated its in-line rating on Motorola. In related news, Prudential Equity Group maintained its neutral weight rating on Motorola and increased its estimates on the company. The firm raised its third-quarter EPS estimates on the company from 25 cents to 29 cents and for the full year from $1.01 to $1.08. Prudential also raised its 2006 EPS estimates on Motorola from $1.09 to $1.15. Harris Nesbitt raised its price target on Motorola from $22 to $23 and increased its 2005 and 2006 EPS estimates on the company. Piper Jaffray slightly raised its EPS estimates on Motorola from $1.04 on revenue of $34.8 billion to $1.07 on revenue of $35.5 billion. UBS raised its price target on Motorola from $22 to $24.

   

• Standard & Poor’s Ratings Services affirmed its ratings on iPCS Inc., a Sprint PCS affiliate, including its CCC+ corporate credit rating and CCC senior unsecured debt rating. The company’s outlook is considered developing. S&P also affirmed its CCC rating on the senior unsecured debt of Horizon PCS Inc., another Sprint PCS affiliate. The ratings affirmations follow the recently completed merger of Horizon into iPCS. “The rating on the merged company reflects its high business risk profile common to all Sprint PCS affiliates, its below-average EBITDA margin, the negligible net free cash flow of the pre-merger iPCS and net free cash flow negative status of Horizon PCS, and potential for higher debt leverage in order to support next-generation EV-DO technology,” said Standard & Poor’s credit analyst Catherine Cosentino.

   

• Standard & Poor’s Ratings Services raised its long-term issuer credit rating on China Mobile (Hong Kong) Ltd. to A- from BBB+ based on a decision to raise the long-term and short-term sovereign credit ratings on the People’s Republic of China.

   

• CIBC raised its estimates on Qualcomm Inc. after the company reported strong quarterly results. The firm raised its 2005 earnings per share estimate to $1.15 from $1.13 and 2006 EPS estimates to $1.56 from $1.41. CIBC said it remains bullish on W-CDMA shipments in the second half and raised its price target to $47 from $45.

   

• Merrill Lynch raised its 2006 earnings per share estimates for Hewlett-Packard Co. from $1.70 to $1.80 following news of the company’s restructuring plans, which could yield $1.9 billion in total savings. In related news, Standard & Poor’s Ratings Services said it does not expect HP’s restructuring program to have an impact on its ratings or outlook for the company.

   

• Pacific Growth Equities reiterated its over weight rating on mobile gaming company Jamdat Mobile Inc., saying the company’s recent deals with Verizon Wireless and Sprint PCS should have no material impact on its fundamentals.

   

• Lehman Brothers raised its price target on Dobson Communications Corp. to $7 based on improvements in core fundamentals, including fewer subscriber losses, reduced churn and ARPU expansion, as well as continued strength in roaming revenues and strong demand for wireless services. The previous price target was $2. Lehman rates Dobson at equal weight.

   

• Analysts at JP Morgan initiated coverage on RadioShack with a neutral rating saying the retailer has a high-concentration risk because of its dependence on wireless. The retailer recently suggested it has experienced a slowdown in its wireless business, which comprises more than 40 percent of its sales base. JP Morgan also pointed to the growing trend of carrier-owned stores as putting pressure on RadioShack. In addition, JP Morgan noted RadioShack has two contracts up for renewal in the next year, including its contract with Verizon Wireless that is set to expire Dec. 31 and its contract with Sprint PCS that expires next June.

   

• In a second-quarter telecom preview, Merrill Lynch said it expects Verizon Wireless will gain share, Cingular Wireless will remain solid but will slow, and the remaining national operators will track steadily. Robert W. Baird also previewed second-quarter telecom results, saying it expects solid wireless results.