Weekly wireless ratings wrap-up

The following list includes ratings changes and financial information for wireless companies announced this week by investment-banking and financial-services firms.

Carriers

• Standard & Poor’s Ratings Services assigned an A rating to Verizon Communications Inc.’s $4 billion aggregate offering of four series of notes. “Our ratings on Verizon reflect strong business position and cash generation of the fast-growing wireless segment, sizable local exchange operations capable of producing substantial free cash flow, a good position serving enterprise customers gained with the MCI acquisition, and a modest financial risk profile,” said Standard & Poor’s credit analyst Eric Geil.

• Prudential Equity Group raised its estimates on Qwest Communications International after the carrier reported results that fell below expectations. Prudential said it expects the company to return to profitability this year. For fiscal year 2006, Prudential forecasts the company will report 3 cents earnings per share, rather than a loss of 9 cents.

• Standard & Poor’s Ratings Services revised its outlook on Ntelos Holdings Corp. to stable from negative, saying proceeds from the company’s planned initial public offering will be used to repay $135 million of floating rate notes when they become callable in April. S&P affirmed its ratings, including its B corporate credit rating on the company.

• Morgan Stanley analyst Simon Flannery raised his rating on Cincinnati Bell Inc. from underweight to overweight. He cited the stock’s recent underperformance, which drives attractive valuation and upside potential, signs of stabilization in key metrics and upside to 2006 estimates.

• Standard & Poor’s Ratings Services raised its ratings on the debt of entities related to Alamosa Holdings Inc. following the completion of Sprint Nextel’s acquisition of the carrier’s assets. Ratings on Sprint Nextel were affirmed. S&P also raised its rating on the debt of Sprint Nextel subsidiaries US Unwired Inc. and IWO Holdings Inc. Nextel Partners Inc.’s ratings remain on CreditWatch with positive implications where they were placed in October.

• Merrill Lynch initiated coverage on Leap Wireless with a sell rating saying the stock currently trades at a premium.

Infrastructure and handset vendors

• Prudential Equity Group lowered its estimates on UTStarcom Inc. after the company reported preliminary fourth-quarter results and initiated an accounting review. The firm reduced its first-quarter sales forecast to $519 million from $680 million and an EPS loss for the quarter of 75 cents, rather than a loss of 24 cents.

• Prudential Equity Group raised its rating on Nortel Networks Ltd. from neutral to overweight. The firm said Nortel’s settlement of shareholder lawsuits frees the company’s CEO, Mike Zafirovski, to focus on sales and cash flow growth.

International

• RBC Capital Markets lowered its price target on Rogers Communications Inc. from $65 to $62 and reduced its 2006 EPS estimate from $1.60 to $1.01 and 2007 from $2.34 to $1.79. The firm cited financial results that fell short on wireless and media. Morgan Stanley raised its price target on Rogers from $39 to $46.80 despite disappointing results. The firm noted the results were a result of the carrier pursuing a wireless strategy that included disciplined pricing and targeting high-value subscribers. Morgan Stanley said it believes that strategy will be the correct one for the company this year. Merrill Lynch trimmed its price target on the company to $45.50, citing soft 4Q results.

Other

• Standard & Poor’s Ratings Services raised its corporate credit rating on Freescale Semiconductor Inc. to BBB- from BB+, reflecting improved profitability. The outlook on the company also was revised to stable from positive.

• Piper Jaffray raised its opinion on RealNetworks Inc. from market perform to outperform and raised its price target from $8.70 to $10. Piper Jaffray cited several reasons for the upgrade, including that RealNetworks’ core music segment remains on track; it is acquiring a solid gaming portfolio; and the company has cash reserves it can use for share buybacks and acquisitions. A day later, however, Piper slightly lowered the price target to $9.50 and lowered revenue estimates from $381 million to $370 million for 2006 due to lower assumptions for the company’s business music and business products and services businesses.

• Prudential Equity Group raised its price target on Hewlett-Packard Co. from $36 to $38 before the company reported first-quarter results and then again from $38 to $39 after the company released strong results. Credit Suisse First Boston raised its rating on the company, from neutral to outperform on the news. First Albany Capital also raised estimates on HP for the second quarter, from EPS of 44 cents to 49 cents. For the full year, First Albany forecasts EPS of $1.95 rather than $1.83.

• Credit Suisse First Boston raised its price target on Nvidia Corp. from $38 to $47 in advance of the company’s fourth-quarter earnings report. RBC Capital Markets also increased its price target on the company, from $40 to $46, saying it expects solid revenues and strong margins.

• Piper Jaffray raised its price target on Analog Devices Inc. from $34 to $37 after the company reported results in-line with forecasts.

• CIBC World Markets initiated coverage on Andrew Corp. with a sector perform rating. CIBC analyst Ittai Kidron said Andrew’s power amplifier and coverage solutions businesses should drive revenue growth during fiscal 2006, and a reversal of negative trends in satellite and network solutions will offer potential upside.