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Nextel Partners up 50% in debut
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February 23, 2000: 4:26 p.m. ET
Offering a boon to blossoming wireless telecom sector, observers say
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - Nextel Partners, the U.S. affiliate of Nextel Communications, made its debut on Wall Street Wednesday, raising $470 million in an initial public offering on the Nasdaq.
Nextel Partners (NXTP: Research, Estimates) has exclusive rights to provide Nextel Communications' (NXTL: Research, Estimates) digital wireless personal communications services, or PCS, to customers in small and mid-sized markets.
Goldman, Sachs & Co. and Donaldson, Lufkin & Jenrette co-managed the offering, pricing 23.5 million shares at 20 per share. Last week, the underwriters had expected to offer the shares in a range between 18 and 20.
Shares ended their first day of trade up 10-1/8 at 30-1/8, a 50.6 percent gain. Meanwhile, the Nasdaq composite index finished 168.02, or 3.8 percent, higher at 4,550.14..
The Nextel offering is the latest in a spate of PCS offerings, which some market observers see lighting up the wireless market.
Click here for a look at CNNfn.com's wireless stock tracker
Alamosa (APCS: Research, Estimates), a division of Sprint PCS Group, rose 56 percent when it made its debut earlier this month. Triton, which is affiliated with AT&T (T: Research, Estimates), went public in October and rose 100 percent on its first day of trading.
But Nextel's debut performance is quite good, considering the size of the deal, according to Jeffrey Hirschkorn, senior market analyst with IPO.com.
"This is a large float of 23.5 million shares, and that's a lot to digest," Hirschkorn said. "Typically when you have large floats, the returns are muted. We were expecting a return in the range of 50 and 60 percent."
As of Dec. 31, it had about 46,000 digital subscribers, according to documents the company filed with the Securities and Exchange Commission.
Given its affiliation with Nextel Communications, Hirschkorn said he expects the company, as well as the rest of the industry, to continue to perform strongly.
"It should do very well because it has some good name backing with Nextel," he said. "And it's in the PCS market, which is a hot marketplace. This is a strong market for PCS stocks, and its boding well for the entire IPO market in March."
Earlier this month, AT&T named the underwriting team for its initial public offering of a tracking stock to represent its wireless services business. That offering is expected to raise as much as $100 million.
Nextel Partners reported an operating loss of $40.7 million, including stock-based compensation expenses, during the quarter ended Dec. 31, compared with a loss of $11.2 million for the same period a year earlier. Executives said they expect to continue to operate in the red through 2003. 
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