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.

Click here for wireless ratings from past weeks from RCR Wireless News.

Carrier

• Merrill Lynch lowered its price target on Telephone & Data Systems from $50 to $48 per share due to a structural discount. The firm lowered its 2006 estimates on TDS subsidiary U.S. Cellular Corp.

Handset and infrastructure vendors

• Standard & Poor’s Ratings Services revised its outlook on Motorola Inc. to positive from stable and affirmed its BBB+ corporate credit rating and other ratings. The move reflects generally improving trends that benefit Motorola’s cellular product business, said S&P.

   

• RBC Capital Markets lowered its 2006 and 2007 EPS estimates on Nortel Networks Ltd. after the company said it would restate previous financials and delay its 2005 financial report. For 2006, RBC Capital expects EPS of 12 cents rather than 15 cents; and for 2007 it predicts EPS of 18 cents rather than 20 cents. Prudential Equity Group lowered its estimates on the company from 20 cents to 18 cents for 2006. R.W. Baird lowered its 2006 EPS estimate on Nortel from 13 cents to 12 cents.

   

• RBC Capital Markets downgraded Palm Inc. to sector perform from outperform, saying although it expects the company to report strong fiscal 3Q results, fourth-quarter guidance may not beat expectations. In addition, the firm said Palm is now “priced for perfection” at its current valuation. RBC increased its third-quarter estimates on the company to revenue of $380 million from $374 million and EPS of 17 cents from 16 cents. Fourth-quarter estimates, however, decreased from $401 million to $392 million. JP Morgan also downgraded Palm to neutral from overweight. Analysts at JP Morgan said the company’s stock is approaching an appropriate value.

Other

• First Albany Capital started coverage on Powerwave Technologies with a neutral rating.

   

• Credit Suisse First Boston raised its semiconductor sector rating to market weight from underweight

   

• Avondale Partners upgraded its rating on LCC International Inc. from underperform to perform after the company reported slightly better-than-expected results for the fourth quarter and announced a strategy shift toward consulting, software tools and operations/maintenance and away from U.S. deployment work. Avondale also increased its price target on the company from $2 to $3.

   

• First Albany Capital lowered its 2006 revenue and EPS estimates on Wireless Facilities Inc. after the company reported fourth-quarter results. First Albany’s revenue estimate for 2006 drops to $400 million, down from $471.2 million, and EPS estimates drop to 18 cents from 28 cents. Avondale Partners lowered its 2006 EPS estimate on the company to 10 cents from 16 cents and initiated a 2007 estimate of 12 cents. Credit Suisse First Boston lowered its calendar year 2006 estimates to earnings of 22 cents on revenues of $408 million from 28 cents on revenues of $464.8 million. It also lowered 2007 estimates to 30 cents on revenues of $453 million from 33 cents on revenues of $500 million.

   

• Robert W. Baird lowered its rating on Comverse Technology Inc. from outperform to neutral. Comverse pre-announced its fourth-quarter results and noted it would review grant option practices. Baird noted the options inquiry could overhang the company’s shares near-term. RBC Capital Markets maintained its sector perform rating on Comverse but raised its risk-qualifier to speculative from above average risk. Standard & Poor’s Ratings Services put its credit and senior unsecured debt ratings on Comverse on CreditWatch with negative implications following the news.

   

• Lehman Brothers upgraded Sierra Wireless Inc. to overweight from equal weight, saying its checks suggest robust carrier optimism on data card sales.

   

• Harris Nesbitt raised its price target on Harris Corp. from $48 to $50 and bumped its fiscal 2007 pro forma EPS estimate to $2.52 from $2.30. It maintained its neutral rating on the company as well as its 2006 estimates. The moves come after Harris provided a positive financial outlook for 2007.

   

• Lehman Brothers raised its price target on Global Signal from $50 to $52 and reiterated its equal weight rating on the company after it reported solid fourth-quarter results.

   

• First Albany Capital raised its price target on InterDigital Communications Corp. from $27 to $32 after the company reported in-line fourth quarter results and provided a positive outlook. In addition, First Albany increased its 2006 revenue and EPS estimates on the company to $212.8 million and 69 cents from $156.9 million and 28 cents. It introduced 2007 revenue and EPS estimates of $218.6 million and 81 cents. Piper Jaffray adjusted its 2006 estimates from $3.86 per share on revenues of $490 million to $3.97 per share on revenues of $498 million. For 2007 it expects earnings of 16 cents per share on revenue of $169 million rather than EPS of 14 cents on revenue of $158 million.