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

• Morgan Stanley downgraded its opinion on Alltel Corp. to equal weight from overweight following a rally in the company’s share price this week on takeover speculation. At its current price, the stock only provides a 3.7-percent upside to Morgan Stanley’s $69 price target on the company. Lehman Brothers raised its price target on Alltel from $75 to $80, noting the carrier’s planned share buyback and saying Alltel remains its favorite pick in the rural telecom space.

• Standard & Poor’s Ratings Services placed its rating on Leap Wireless International Inc., including its B- corporate credit rating, on CreditWatch with negative implications. “This follows the possibility the company will trigger a potential default under its $710 million senior secured credit facility, because of the company’s announcement that it planned to restate its audited financial statements for the five months ended Dec. 31, 2004, and the nine months ended Sept. 30, 2005,” said Standard & Poor’s credit analyst Allyn Arden.

• R.W. Baird lowered its rating on BellSouth Corp. from outperform to neutral on the news of its planned acquisition by AT&T Corp. RBC Capital Markets also downgraded BellSouth, from outperform to sector perform, on terms of the acquisition. Meanwhile, Prudential Equity Group raised its price target on AT&T Inc. from $28 to $32. Morgan Stanley raised its rating on AT&T to overweight from equal weight and established a 12-month price target on the company of $31. Standard & Poor’s Ratings Services said its ratings for AT&T Inc., BellSouth Corp. and Cingular Wireless L.L.C. remain on CreditWatch with negative implications following the merger agreement announced by AT&T and BellSouth. “The ratings for AT&T and BellSouth were placed on CreditWatch with negative implications on Jan. 13, 2006; this action reflected our view that there is a higher level of uncertainty about the business prospects for the local wireline businesses of investment-grade communications carriers and also prompted the placement on CreditWatch negative of CenturyTel Inc., Telecomunicaciones de Puerto Rico Inc. and Cingular Wireless,” said Standard & Poor’s credit analyst Catherine Cosentino.

Infrastructure and Handset Vendors

• Harris Nesbitt raised its FY2Q06 pro forma EPS estimate on Qualcomm Inc. to 41 cents from 37 cents and raised its FY06 pro forma EPS estimate to $1.55 from $1.51 on news that Qualcomm increased its FY2Q06 financial outlook to a pro forma EPS range of 40 cents to 41 cents from 35 cents to 37 cents. CIBC World Markets raised its revenue estimates on Qualcomm for fiscal year 2006 to $7.37 billion from $6.85 billion and its earnings estimate to $1.63 from $1.50 per share. For fiscal year 2007, it changed its revenue estimate to $8.68 billion from $7.97 billion and its EPS estimate to $1.85 from $1.72. Credit Suisse First Boston increased its FY06 and FY07 EPS estimates to $1.55 and $1.77 from $1.47 and $1.75. It maintained its neutral rating and $50 price target on the company. RBC Capital Markets raised its 2006 EPS estimate on Qualcomm to $1.54 from $1.47.

• Harris Nesbitt reduced its pro forma EPS estimates on Research In Motion Ltd. for fiscal year 2006 to $2.53 from $2.66 and for fiscal year 2007 to $3.40 from $3.42. The changes come after RIM settled its patent dispute with NTP for $612.5 million and pre-announced lower-than-expected fourth-quarter results. Harris Nesbitt raised its price target from $72 to $80 following the news. Credit Suisse First Boston lowered its FY06 EPS estimate on the company to $2.53 from $2.66 due to weaker subscriber net adds and software revenue. It maintained its FY07 EPS estimate at $3, its underperform rating and its $60 price target on the company. CSFB said it expects the competitive landscape for RIM to intensify this year. RBC Capital Markets raised its price target on RIM to $95 from $75 and adjusted its FY06 estimates to EPS of $2.52 on revenues of $2.059 billion from EPS of $2.67 on revenues of $2.114 billion. It increased its FY07 estimates to revenues of $2.815 billion from $2.787 billion and maintained its EPS estimate for the year of $3.50. Piper Jaffray increased its price target on RIM from $68 to $82 and raised its FY07 EPS estimate from $3.22 to $3.33 and its FY08 estimate from $3.43 to $3.56.

Other

• RW Baird raised its estimates on OmniVision Technologies Inc. after LG Electronics chose the company to provide CMOS image sensors for its mobile phones. Baird raised its fiscal 2007 revenue and EPS estimates to $567 million and $1.60 and its 2008 revenue and EPS estimates to $619 million and $1.55.

• Morgan Stanley raised its price target on Global Signal Inc. from $46 to $50, saying the company easily exceeded fourth-quarter expectations and presented an upbeat forecast for future leasing activity.

• Merrill Lynch raised its 2006 estimates on American Tower Corp. after the company reported better-than-expected fourth-quarter results. Merrill Lynch now expects the company to report revenues of $1.26 billion rather than $1.23 billion.

• Harris Nesbitt raised its 2006 EPS estimate on Texas Instruments Inc. to $1.67 from $1.51 and its 2007 EPS estimates to $1.95 from $1.63. During its mid-quarter update, TI raised its guidance to the high-end of an earlier range it had provided. RBC Capital Markets lowered its 2006 estimates on the company from $1.54 to $1.49. Credit Suisse First Boston raised its estimates on TI from EPS of 31 cents on $3.2 billion to 32 cents on revenues of $3.25 billion.

• RBC Capital Markets raised its rating on Amdocs Ltd. from sector perform to outperform on potential positive fallout for the company that could result from the merger of BellSouth and AT&T. RBC raised its target on the company from $34 to $40.

• Lehman Brothers raised its price target on Broadcom Corp. to $54 from $50 and bumped its 2006 EPS estimate to $1.43 from $1.40 following meetings Lehman analysts had with company executives. Lehman highlighted the company’s Bluetooth division strengths and its target of controlling 10-15 percent of the handset market in three years.

• Credit Suisse First Boston raised its price target on Andrew Corp. from $12 to $14 and increased its fiscal year 2006 and 2007 EPS estimates to 57 cents and 70 cents from 53 cents and 66 cents respectively. CSFB rates the company at neutral. The firm said it views Andrew as a leader in wireless subsystems and expects the company to benefit from strong market growth during the next few years.