The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Carriers
Fitch Ratings affirmed its A+ issuer default rating on Verizon Communications Inc. and removed it from Rating Watch Negative, where it was placed nearly a year ago when it announced it would buy MCI Inc. Fitch assigned a stable rating outlook to Verizon. The affirmation, removal from Rating Watch Negative and stable outlook also apply to long-term Verizon-related subsidiaries including Verizon Wireless.
S&P Equity Research downgraded its rating on shares of Sprint Nextel Corp. from buy to hold, saying the company’s integration of several wireless acquisitions could narrow margins. S&P also lowered its earnings-per-share estimate for 2005 to $1.40 from $1.50 and for 2006 to $1.60 from $1.75. The firm also lowered its price target on Sprint Nextel to $26 from $31. S&P noted it believes achieving normalized sales growth above 10 percent will be challenging in the maturing U.S. market unless the company pursues lower ARPU and prepaid customers.
Other
RBC Capital Markets preliminarily adjusted its fiscal 2005 and fiscal 2006 estimates on Sierra Wireless Inc. to account for the company’s revised guidance and stronger interim sell-in of PC cards and modules. For 2005, RBC expects revenues of $107 million and earnings per share of 77 cents, from revenues of $102 million and EPS of 83 cents. For 2006, the firm estimates revenues will be $167 million with EPS of 10 cents, from revenues of $162 million and EPS of 22 cents. Piper Jaffray also adjusted estimates on the company. For the fourth quarter, Piper Jaffray expects Sierra’s revenue and EPS of $37 million and 5 cents per share, from $32 million and 12 cents per share. 2006 revenue and EPS estimates change to $174 million and 25 cents per share from $168 million and 21 cents per share. 2007 revenue and EPS estimates change to $223 million and 45 cents per share, from $215 million and 41 cents per share.
First Albany Capital raised its estimates on Xilinx Inc. after the company increased its guidance. For the December quarter, First Albany Capital expects the company to report earnings per share of 29 cents on revenue of $446 million, up from its previous estimate of 26 cents on $423 million. For fiscal year 2006, the firm expects EPS of $1.04 on revenue of $1.72 billion, compared with EPS of 96 cents on revenue of $1.66 billion. For fiscal 2007, EPS is expected to be $1.25 on revenue of $1.95 billion, up from previous estimates of EPS of $1.09 on revenue of $1.825 billion. The company is rated at neutral. Robert W. Baird also increased its estimates on Xilinx to EPS of $1.02 rather than 97 cents for fiscal 2006, and to $1.27 from $1.18 for fiscal 2007. Baird also rates Xilinx at neutral.
Avondale Partners L.L.C. reiterated its market outperform rating on SpectraLink Corp. and raised its 2006 earnings-per-share estimate by 7 cents to 81 cents after the company closed its acquisition of Kirk Telecom. Avondale also raised its price target on SpectraLink from $15 to $16 on the news.
CIBC World Markets lowered its revenue and earnings-per-share estimates on Skyworks Solutions Inc. for 2006 to $748.3 million and 21 cents from $751.9 million and 25 cents. CIBC said during the last year Motorola Inc. has mixed its RF suppliers, which has had a negative impact on Skyworks as it has lost designs in EDGE and W-CDMA to RF Micro Devices Inc. and Freescale Semiconductor Inc. CIBC went on to note that it expects Skyworks to gain back some EDGE and W-CDMA designs late this year and therefore left its rating on the company unchanged.
Ambrish Srivastava, senior research analyst at Harris Nesbitt Technology Group, downgraded the firm’s sector rating on the communications semiconductor group to negative from positive. “Lead times continue to stretch out unabated across multiple product categories caused by shortages in both front- and back-end, thus raising the risk of double bookings, reduced visibility, increased inventory levels, and ultimately risk to numbers,” said Srivastava. As part of the overall downgrade, Harris Nesbitt downgraded Freescale Semiconductor to neutral from outperform and lowered its price target on the company to $25 from $29. Harris Nesbitt said it believes Freescale’s stock performance already reflects the execution and margin improvements the company has shown and is expected to show over the next few quarters.
Avondale Partners L.L.C. dropped coverage of Pctel Inc. in order to narrow its telecommunications sector coverage. The firm rates Pctel at market perform and said its opinion on the company is not the reason for its decision to drop coverage. The company provides wireless broadband solutions including antenna products, software-based RF interference management products and mobility software solutions.
