The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Carriers
Lehman Brothers upgraded its rating on CenturyTel Inc. from underweight to equal weight and raised its price target on the company to $38 from $35 based on the potential that the company will announce an incremental $350 million repurchase program during the first quarter.
Standard & Poor’s Ratings Services lowered its rating on Alltel Corp., including its long-term credit rating from A to A- and its short-term corporate credit rating to A-2 from A-1. The ratings were removed from CreditWatch with negative implications where they were placed in December when the company announced it would spin off and merge its wireline business with Valor Communications Group Inc. The outlook is stable. “The downgrade reflects heightened business risk ascribed to the company as a regional wireless provider competing against larger national wireless carriers in an environment of slowing subscriber growth,” said Standard & Poor’s credit analyst Catherine Cosentino.
Standard & Poor’s Ratings Services lowered its long-term ratings on Verizon Communications Inc. and related entities, including on Verizon Wireless, by one notch and removed them from CreditWatch where they were placed with negative implications nearly a year ago. The corporate credit rating was lowered to A from A+. In addition, the ratings for AT&T Inc.,BellSouth Corp. and CenturyTel Inc. were placed on CreditWatch with negative implications. Cingular Wireless L.L.C.‘s rating were also placed on CreditWatch negative. The actions were based on S&P’s view of a weakend wireline business position and challenges from Voice over Internet Protocol.
Infrastructure and Handset Vendors
CIBC World Markets raised its first-quarter 2006 revenue and earnings-per-share estimates for Motorola Inc. to $9.6 billion and 29 cents from $9.2 billion and 27 cents. For fiscal year 2006, CIBC adjusted its estimates to EPS of $1.35 on revenues of $42.2 billion from EPS of $1.33 on revenues of $41.6 billion. The firm said it believes Motorola has the potential to beat estimates this year after the vendor reported in-line fourth-quarter results.
UBS reduced its price target on Lucent Technologies Inc. to $2.70 from $3.10 and maintained its neutral rating on the company. UBS noted mobility weakness in both the United States and China factored into a first-quarter sales shortfall. Robert W. Baird also lowered its estimates on Lucent on U.S. wireless weakness. Baird now expects fiscal 2006 revenues of $9.44 billion and earnings of 14 cents per share rather than revenues of $9.57 billion and 15 cents per share. For fiscal 2007, it lowered revenue expectations to $9.96 billion from $10.1 billion and maintained EPS expectations of 16 cents.
Lehman Brothers downgraded its opinion on Siemens AG from equal weight to underweight, saying the current premium being paid on Siemens shares is based on near-term expectations of value creation from potential portfolio adjustments in communications and business services that Lehman analysts believe will be difficult to realize. It did note that it believes Siemens management will try to deliver on some meaningful portfolio decisions throughout the year.
Other
Prudential Equity Group raised its fiscal 2006 earnings-per-share estimate on Amdocs Ltd. from $1.50 to $1.53. The company announced first-quarter 2006 revenues that beat guidance and its recent deal with Sprint Nextel boosted guidance for 2006. RBC Capital Markets bumped its price target on Amdocs to $34 from $31. Standard & Poor’s Ratings Services affirmed its BBB- corporate credit rating and unsecured ratings on the company and revised its outlook on the company from positive to stable. Lehman Brothers raised its price target on Amdocs from $33 to $36 on the company’s financial report and Sprint Nextel contract.
Robert W. Baird trimmed its estimates on Convergys Corp. after the company lost a billing contract with Sprint Nextel. Baird reduced its 2006 estimates on the company to $1.07 from $1.15 and cut its price target to $16. Standard & Poor’s Ratings Services revised its outlook on Convergys to negative from stable on the news. S&P reiterated the company’s BBB corporate credit and senior unsecured debt ratings, as well as its A-2 commercial paper rating.
Prudential Equity Group raised its rating onRadioShack Corp. from neutral to overweight, saying it has positive expectations for 2006 with the initial phase of the Verizon-to-Cingular transition now complete. Prudential also raised its price target on RadioShack from $24 to $26.
Prudential Equity cut its quarterly earnings-per-share estimates on Xilinx Inc. into 2006 based on more conservative operating expense assumptions. For 2006, Prudential lowered its EPS estimate from $1.28 to $1.22. The firm rates Xilinx at underweight.
Piper Jaffray raised its price target on Analog Devices Inc. from $33 to $34 after ADI announced the sale of its FUSIV network processor and ADSL ASIC product lines to Ikanos Communications.
First Albany Capital raised its price target on AudioCodes Ltd. to $15 from $13 and reiterated its buy rating on the company. It also increased its fourth-quarter 2005 earnings-per-share estimate on the company to 9 cents from 8 cents on slightly better gross margins and slightly lower research and development expenses. First Albany noted expectations of strong VoIP growth, steady wireline and enterprise spending and strength in cable, wireless and the delivery of new applications.
