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News > Technology
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Downgrades whack wireless stocks
Pessimistic growth forecast from Sprint PCS spurs flurry of brokerage downgrades for sector stocks.
June 14, 2002: 1:01 PM EDT

NEW YORK (CNN/Money) - A downbeat outlook for subscriber growth at the nation's No. 4 wireless telephone service provider set off a chain reaction of selling early Friday.

Shares of Sprint PCS (PCS: down $2.34 to $3.65, Research, Estimates) bore the brunt of the selling, trading more than 36 percent lower after it said late Thursday that its subscriber growth this year will be sharply below its previous estimate.

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The company, the fourth-largest wireless service provider in the United States, said it now expects to add just 300,000 new subscribers in the second quarter, while subscriber growth for the full year will fall as much as 15 percent below the 3 million additional subscribers the company previously said it was hoping to gain.

Sprint PCS, a unit of Sprint Corp. with its own tracking stock, stood by its full-year profit targets in spite of the weaker-than-expected subscriber growth. Still, the news prompted a flurry of brokerage downgrades of Sprint PCS shares as well as shares of other wireless service providers Friday.

"These stocks were fighting against darkening sentiment already and now we expect investors to avoid this group for some time," J.P. Morgan said in a research note.

The firm cut its rating on Sprint's shares to "market perform" from "buy."

J.P. Morgan also cuts its ratings on other wireless service providers Friday, including Nextel Communications (NXTL: down $0.57 to $3.58, Research, Estimates) and local service provider Leap Wireless (LWIN: down $0.14 to $1.42, Research, Estimates).

At the same time, Merrill Lynch slashed its ratings on a raft of wireless service providers shares, including: AT&T Wireless (AWE: down $0.90 to $5.45, Research, Estimates); Triton PCS (TPC: down $2.33 to $5.00, Research, Estimates); Alamosa (APS: down $0.22 to $1.25, Research, Estimates); Airgate (PCSA: down $0.19 to $1.35, Research, Estimates); and Western Wireless (WWCA: down $0.40 to $2.86, Research, Estimates).

Merrill said it is concerned that wireless service providers fearing lost market share may become more aggressive in pricing their service plans, which in turn will have a negative impact on their bottom lines.

Analysts at Morgan Stanley, Thomas Weisel Partners, Soundview Technology and other firms also weighed in with downgrades of Sprint PCS and other wireless stocks Friday.

The North American Telecommunications index was down 33.12 points at 432.1, a 7.1 percent decline.  Top of page






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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.