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

• Standard & Poor’s Ratings Services placed its B- corporate credit rating and bank loan ratings on Virgin Mobile USA L.L.C. on CreditWatch with negative implications. The action comes after the company revealed it is not in compliance with minimum service revenue covenants under its bank credit agreement as of the end of 2005. S&P said the company is negotiating an amendment to its bank loan.

  Handset and infrastructure vendors

   

• RBC Capital Markets increased its EPS estimates on Alcatel from 0.69 Euros to 0.76 Euros due to continued momentum in the wireline segment.

   

• Credit Suisse First Boston raised its estimates on Motorola Inc., saying the vendor will benefit from improved handset product positioning at the high end and in emerging markets. For 2006, revenue estimates increase to $42.2 billion from $41.5 billion and for 2007 they increase to $45.1 billion from $44.4 billion. EPS estimates for 2006 and 2007 also increase to $1.38 from $1.35 and to $1.55 from $1.53 respectively.

   

• Lehman Brothers raised its price target and estimates on Nokia in conjunction with the firm’s upward revisions in its global handset estimates and following Nokia’s higher ASP pre-announcement. The company raised its price target on Nokia from $19.50 to $22. New EPS estimates are 27 cents rather than 24 cents for the first quarter.

   

• Standard & Poor’s equity research upgraded its opinion on Palm Inc. from hold to buy on news SingTel has become the first carrier to offer Research In Motion Ltd.’s Blackberry service on Palm’s Treo 650 device. S&P said it has long believed that a push e-mail service is the key to broader adoption of the Treo. S&P further raised its price target on Palm to $27 from $21.

   

• Harris Nesbitt reduced its fiscal year 2007 pro forma EPS estimate on Research In Motion Ltd. to $3.02 from $3.40 after the company reported fourth-quarter 2006 pro forma EPS of 65 cents, slightly below its estimate of 66 cents. In addition, RIM announced a subscriber outlook that was below expectations. Harris Nesbitt introduced a FY2008 pro forma EPS estimate of $3.77 on revenues of $3.3 billion. Credit Suisse First Boston also lowered its FY07 estimates on the company to $2.90 from $3, saying it believes RIM will face an increasingly competitive market. RBC Capital Markets lowered its estimates on the company for FY07 to $3.05 on revenues of $2.686 billion from $3.47 on revenues of $2.793 billion. It introduced FY08 estimates on the company of $3.95 on revenues of $3.369 billion. Other firms lowering estimates include Piper Jaffray.

  Other

   

• Lehman Brothers raised its price target and estimates on RF Micro Devices, citing strength in the global handset market that it said disproportionately benefits RFMD’s leading customer Nokia. Lehman also said shipments of RFMD’s POLARIS Radio Module to Motorola Inc. have strengthened. RFMD’s new price target is $10, up from $9. Its March quarter revenue estimates increase to $212 million and its June quarter estimates increase to $222 million and 8 cents per share. Fiscal 2007 estimates change to 38 cents and calendar 2007 estimates change to 41 cents.

   

• Standard & Poor’s Ratings Services raised its corporate credit rating on Brightpoint Inc. to BB- from B+, reflecting expectations the company will sustain its profitable revenue growth and good financial profile. The company’s outlook has been revised to stable.

   

• RBC Capital markets raised its fiscal year 2006 estimates on Comverse Technology Inc. to $1.58 billion, leaving its EPS estimate unchanged at 86 cents. Comverse announced it purchased NetCentrex for $164 million. RBC also raised 2007 estimates to $1.12 on revenues of $1.83 billion.

   

• First Albany Capital upgraded Carrier Access Corp., saying it has become more confident that the company will retain a strong position with key customer Cingular and that macro trends in wireless favor the company’s products. First Albany raised its 2006 revenue and EPS estimates from breakeven on revenues of $87.8 million to EPS of 9 cents on revenues of $93.3 million.

   

• Avondale Partners raised its price target on Plantronics Inc. from $38 to $40, saying the office and contact segment is expected to outperform in the March quarter. In addition, Avondale raised its March quarter EPS estimate on the company to 45 cents from 42 cents.