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.

Carriers

• Standard & Poor’s Ratings Services assigned an A-2 short-term rating to Sprint Nextel Corp.’s potential $2 billion 4(2) commercial paper program. “The program is backed by the company’s $6 billion unsecured revolving credit facility maturing in 2010,” said Standard & Poor’s credit analyst Eric Geil. S&P said the credit facility is undrawn, but availability currently is reduced to $3.5 billion by the $2.5 billion letter of credit required under the FCC’s Report and Order related to the Nextel spectrum reconfiguration plan. The firm said proceeds will be used for general corporate purposes. S&P retained its A- corporate credit and unsecured debt ratings on the carrier and its subsidiaries.

Handset and infrastructure vendors

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• RBC Capital Markets adjusted its estimates on Research In Motion Ltd. on slower reacceleration trends of subscribers post NTP. For fiscal 2007, RBC said it expects revenues of $2.793 billion, down from $2.815 billion and EPS of $3.47, down from $3.50. It maintained its outperform rating and $95 price target on the company.

   

• Piper Jaffray raised its estimates on Motorola Inc., saying its checks indicate strong trends for the vendor’s handsets in the first quarter. For 2006, the firm predicts EPS of $1.25 on revenues of $41.9 billion, up from its previous estimate of EPS of $1.22 on revenues of $40.9 billion. Its 2007 estimates increase from $1.40 on revenues of $43.1 billion to $1.41 on revenues of $44.1 billion.

   

• Harris Nesbitt raised its mobile device market forecast after Nokia raised its global mobile device market outlook to 15-percent annual volume growth, up from its previous forecast of 10-percent growth. Harris Nesbitt raised its global mobile device market forecast to 920 million units up from 884 million units. For Nokia, the firm raised its device market forecast to 315 million units, from 300 million units, representing roughly a 34-percent market share for the company. As a result, the firm raised its price target on Nokia from $24 to $25. It reiterated its outperform rating on the company.

International

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• Standard & Poor’s Ratings Services said its ratings on Telecomunicaciones de Puerto Rico Inc. remain on CreditWatch with negative implications following Verizon Communications Inc.’s announcement of an agreement to sell its 52-percent interest in the company to America Movil S.A. de C.V. for $939 million in cash.

Other

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• Standard & Poor’s placed its B+ corporate credit rating on Nvidia Corp. on CreditWatch with positive implications, reflecting continued strong operating performance along with strong liquidity.

   

• Credit Suisse First Boston lowered its 2006 and 2007 estimates on Powerwave Technologies Inc. after the company lowered its first-quarter guidance. For 2006, CSFB expects the company to report EPS of 63 cents on revenues of $994 million, down from EPS of 79 cents on revenues of $1.119 billion. For 2007 it expects EPS of 86 cents on revenues of $1.114 billion, down from EPS of 93 cents on revenues of $1.245 billion. Piper Jaffray also lowered its estimates on Powerwave, citing a disappointing start to the year. For 2006, it expects EPS of 65 cents on revenues of $1 billion, down from EPS of 76 cents on revenues of $1.1 billion. For 2007, it expects EPS of 90 cents on revenues of $1.16 billion, down from EPS of 95 cents on revenues of $1.25 billion. It also lowered its price target on the company from $17 to $16. RW Baird also lowered its estimates on Powerwave for the first quarter to EPS of 7 cents on revenues of $195 million due to a slow start in deployments at Cingular Wireless during the quarter. For 2006, it slightly lowered its estimates on the company to EPS of 74 cents on revenues of $1.07 billion from EPS of 75 cents on revenues of $1.08 billion.

   

• Piper Jaffray slightly raised its estimates on RF Micro Devices Inc. based on solid trends with the company’s Polaris product and strong handset trends. For fiscal year 2007, Piper Jaffray predicts EPS of 38 cents on revenues of $932 million, up from an earlier prediction of EPS of 37 cents on revenues of $921 million. Fiscal year 2008 estimates increase to EPS of 45 cents on revenues of $1 billion, from EPS of 44 cents on revenues of $994 million. Credit Suisse First Boston downgraded the company from neutral to underperform, citing upside from new transceiver ramps priced in following the company’s recent stock outperformance and leverage being hampered by capacity constraints and module outsourcing. CSFB maintained its $7 price target on the company.

   

• Prudential Equity Group lowered its rating on RadioShack Corp. from overweight to neutral, saying the retailer’s transition from Verizon Wireless to Cingular Wireless products appears to be more difficult in the short term than it expected. Prudential said the company has shown some strength with Cingular sales in certain regions, but it believes management underestimated Verizon’s stronghold particularly in large Northeastern cities. Prudential also lowered its price target on RadioShack from $26 to $20.

   

• RBC Capital Markets initiated coverage on Openwave Systems with a sector perform rating and a $24 price target. The firm said Openwave is undergoing a turnaround, reversing losses, defending legacy businesses and expanding into new areas.