The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.
Carriers
Robert W. Baird raised its 2006 estimates on BellSouth Corp. from EPS of $1.90 to $2.20 on a change in accounting related to acquisition-related amortization as well as higher wireless and wireline margins.
Standard & Poor’s Ratings Services placed its ratings on Telephone & Data Systems Inc. and its 81-percent-owned wireless subsidiary United States Cellular Corp. on CreditWatch with negative implications. “This follows TDS’ Jan. 24, 2006, press release that it will delay reporting third-quarter 2005 earnings results because of its recent discovery of accounting errors related to its income tax reporting,” said Standard & Poor’s credit analyst Catherine Cosentino.
Standard & Poor’s Ratings Services placed its ratings on SunCom Wireless Holdings Inc., including its CCC+ corporate credit rating, on CreditWatch with negative implications. The company’s B- bank loan rating was also placed on CreditWatch with negative implications but its bank loan recovery rating of 1 was affirmed. The action followed SunCom’s announcement that it had retained Lazard Freres & Co. L.L.C. to assist in evaluating options to improve the company’s financial position. SunCom also reported results with EBITDA coming in below expectations, said S&P. Merrill Lynch also lowered estimates on the company.
Standard & Poor’s Ratings Services lowered its rating on Rural Cellular Corp.‘s 11.38-percent senior exchangeable preferred stock issue to D from C after the company announced it would not declare dividends on the stock in November and February. S&P affirmed its ratings on the company, including its B- corporate credit rating. The outlook is negative.
Prudential Equity Group raised its 2006 total revenue estimate on Alltel Corp. to $10.63 billion from $10.56 billion but lowered its EBITDA forecast to $4.107 billion from $4.118 billion. Consequently its EPS estimate drops to $3.56 from $3.81 for 2006. Alltel released fourth-quarter results including lower wireless financials offset by better wireline results. Robert W. Baird also lowered its 2006 estimated EPS on Alltel from $3.61 to $3.40 on lowered EBITDA expectations.
Infrastructure and Handset Vendors
CIBC World Markets adjusted its estimates on Nokia Corp. after the vendor posted in-line EPS in its fourth-quarter report. CIBC now predicts EPS of 24 cents for the first quarter, up from 23 cents. For 2006 it expects EPS of $1.12 rather than $1.13, and for 2007 it predicts EPS of $1.25 rather than $1.26. Harris Nesbitt raised its 2006 pro forma EPS estimate on Nokia to $1.16 from $1.15 and its 2007 EPS estimate to $1.36 from $1.33.
CIBC World Markets slightly lowered its second-quarter revenue estimates on Qualcomm Inc. to $1.7 billion from $1.74 billion and maintained EPS estimates at 36 cents. For fiscal 2006, CIBC lowered its revenue estimates on the company to $6.85 billion from $7.1 billion and maintained its EPS estimate of $1.50. Harris Nesbitt raised its FY2006 pro forma EPS estimates on Qualcomm to $1.51 from $1.50 and raised its price target on the company to $53. Prudential Equity Group raised its price target on Qualcomm from $55 to $57 and raised its FY2006 EPS estimate to $1.35 from $1.32, saying the company’s first-quarter results suggest improving 3G market momentum. Piper Jaffray lowered estimates on the company from EPS of $1.50 to $1.48 for FY 2006 on management guidance for a slightly steeper ramp in operating expenses than the firm anticipated.
Lehman Brothers lowered its first-half 2006 and 2007 revenue and EPS estimates on L.M. Ericsson to reflect subdued trends near-term in the wireless infrastructure market with softness in China and Western Europe.
Robert W. Baird slightly lowered both fiscal 2006 and 2007 revenue estimates on Lucent Technologies Inc. but raised EPS estimates on lower tax rate assumptions. Lucent reported results in line with lowered guidance. Prudential Equity Group lowered its fiscal 2006 revenue forecast to $9.43 billion from $9.866 billion, saying it believes Lucent’s revenue recovery may take a few quarters.
Harris Nesbitt raised its 2006 pro forma EPS estimate on Motorola Inc. to $1.30 from $1.21 and raised its 2007 pro forma EPS estimate to $1.42 from $1.28. Motorola’s fourth-quarter results were bolstered by its Government & Enterprise Mobile Solutions segment, said Harris Nesbitt. The firm also raised its price target on the company from $24 to $27. Prudential Equity Group increased its 2006 EPS estimate on Motorola from $1.18 to $1.22 based on its recently increased 2006 handset forecast. Prudential maintained its neutral weight rating and $24 price target on the company, saying Motorola’s dependence on its Razr platform coupled with a volume slowdown in 2006 may limit upside going forward.
International
Merrill Lynch upgraded its rating on Rogers Communications from neutral to buy with a $46.50 price target following a recent decline in its share price.
Other
UBS downgraded its opinion on Tellabs from buy to neutral while raising its price target on the company from $13 to $14 and increasing its EPS estimates on the company. Tellabs reported solid fourth-quarter results.
First Albany Capital slightly lowered its fourth-quarter expectations on Xilinx Inc., saying the company’s strong third-quarter was likely a one-time event. The firm lowered its estimates to EPS of 29 cents on revenues of $468 million from 30 cents on $465 million. For 2006, First Albany expects earnings of $1.05 on revenue of $1.72 billion from $1.04 on revenues of $1.72 billion and for 2007 it expects earnings of $1.25 per share on revenue of $1.96 billion vs. its previous estimate of $1.25 on revenue of $1.95 billion. The firm rates Xilinx at neutral. Harris Nesbitt also slightly lowered its EPS estimates on Xilinx for 2006 from $1.02 to $1.01 and to $1.13 from $1.17 for fiscal year 2007.
