Weekly wireless ratings wrap-up

The following wireless companies had debt ratings changes by financial services firms this week.

• Standard & Poor’s Ratings Services placed its ratings on four wireless tower companies on CreditWatch with positive implications. The companies are SpectraSite Inc., Crown Castle International Corp., AAT Communications Corp. and SBA Communications Corp. American Tower Corp. was placed on CreditWatch with positive implications in January. “Strengthening business prospects could support higher ratings for the companies in this sector,” said Standard & Poor’s credit analyst Catherine Cosentino. “The wireless carriers, particularly the large national players, are expected to continue to increase their geographic footprint, coverage and capacity to support increased minutes of use both for voice and expanding broadband services. Tower companies will benefit from these trends, which should continue to bolster increased tower co-location.”

   

• S&P also said its ratings on Nortel Networks remain on CreditWatch with developing implications due to ongoing uncertainty regarding the company’s financial reporting. In addition, S&P revised its outlook on RF Micro Devices Inc. to negative from stable following the company’s announcement that its earnings for the March quarter would be lower than expected due to increased inventory reserves and high product development expenses. Finally, S&P Equity Research downgraded Qualcomm Inc. to buy from strong buy, saying license-fee growth is slowing and chipset demand in the near term is lower.

   

• Smith Barney Citigroup upgraded its rating on shares of Motorola Inc. from hold to buy, citing first-quarter results that exceeded expectations driven by solid performance in the vendor’s handset business.

   

• Prudential upgraded Nokia from neutral to overweight, saying the vendor is showing an improving operating outlook for fiscal-year 2005, including improving handset momentum.

   

• Goldman Sachs upgraded its rating on Tellabs from underperform to in line and downgraded its rating on Lucent Technologies Inc. from in line to underperform. The firm said Tellabs offers a superior risk vs. reward compared with Lucent. Tellabs showed stronger than expected revenues and gross margins, said the firm.

   

• VeriSign received an upgrade from JP Morgan to overweight from neutral. JP Morgan pointed to the re-acceleration of VeriSign’s mobile content companies Jamba/Jamster, strength in Internet and stabilization in telecommunications businesses as reasons for the upgrade.

   

• Lehman Brothers downgraded Sierra Wireless, saying intensifying competitive pressures make a sales recovery in the second half of this year unlikely. The company said it still expects Sierra to be first to market with HSDPA products; however, up to 10 additional companies are planning HSDPA products.