Panther88
Banned
This is so, so _ _ _. :smh:
WorldCom lying in bed w/ Arthur Andersen like Enron did previously has sent irrecoverable shockwaves throughout the already failing telecomm/wireless industry. How much of our retirements must we lose?
This is severely one of the major drawbacks to working in the 'public' sector. :splat:
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NEW YORK -(Dow Jones)- Moody's Investors Service Friday took the latest stab at the wounded wireless industry, delivering a grim outlook and warning of more possible credit downgrades ahead.
Moody's changed the outlook for the entire industry in the U.S. to negative and placed the majority of non-investment-grade U.S. wireless operators on review for possible downgrade. It also changed the outlook for At&t Wireless Services Inc. (AWE) and Nextel Communications Inc. (NXTL) to negative.
"...Recent announcements from Sprint PCS and two of its affiliates have renewed concern at Moody's that the market may already be more mature than expected and that what, in the second half of 2001, could previously have been interpreted as a cyclical slowdown of growth is now more secular in nature," Moody's said Friday.
One week ago, Sprint Corp. (FON) cut the full-year revenue forecast for its traditional phone and Internet business, saying net customer additions to its Sprint PCS (PCS) wireless division would fall as much as 15% below the company's previous estimates. Sprint affiliates AirGate PCS Inc. (PCSA) and Alamosa Holdings Inc. (APS) also have warned they could come up short on net subscriber additions.
During a conference call to discuss a two-notch downgrade of Sprint on Tuesday, Standard & Poor's analysts said they were taking another look at the entire wireless sector as well.
Responding to investor questions about the rating cut for Sprint Corp. (FON), S&P analyst Rosemarie Kalinowski said Tuesday the agency's outlook for the wireless sector had become increasingly negative in recent weeks.
How Much Growth Potential Left?
"I think what's happened is one: there is certainly a fear factor in place, and two, we are seeing a slowdown in subscribers," said Joe Galzerano, a high- yield telecom analyst at CIBC World Markets. "...There is still plenty of room for growth, I believe. Is there enough growth for six major national players and a handful of regional players? That's the question," he said.
What's more, wireless providers have built balance sheets based on year-after- year growth and still have significant capital expenditures to build networks for second and third generation wireless services, Galzerano said.
"And we are not quite sure what the product or content will be that will enable us to use the cell phone for data," he said.
Wireless Bonds Suffer More Selling
Wireless bonds, which already have been hard hit by selling and previous credit downgrades, lost more ground Friday.
At&t Wireless bonds fishtailed, with spreads to Treasurys initially tightening after Standard & Poor's late Thursday affirmed its ratings only to gap back out on the Moody's negative outlook.
At&t Wireless 8 1/8% notes of '12 were quoted 50 to 75 basis points wider with a spread on the bid side from 550 basis points to 575 basis points over Treasurys while Sprint's 8 3/8% notes due 2012 were quoted 20 basis points wider at 505 basis points to 485 basis points over Treasurys.
A basis points is one one-hundredth of a percentage point.
Moody's Friday revised the outlook on AT&T Wireless, whose senior unsecured rating is Baa2, to negative from stable. At&t Wireless is rated triple-B with a stable outlook by S&P.
"For non-investment grade carriers with weaker capital structures, the situation is more acute, Moody's said. "Many of the business plans, particularly of the Sprint PCS affiliates, are predicated on the existence of a larger, more robust wireless market than is likely to occur," according Moody's..
Moody's said the ratings outlook for Nextel Communications, which has a senior implied B1 and unsecured B3 rating, has been revised to negative from stable. The rating agency said that while Nextel's differentiated product will help protect the carrier near term from the slowdown in the overall sector, ultimately that slowdown accelerates the potential for increased competition as the company launches its latest generation technology networks.
Moody's also has initiated a review of the ratings of all the Sprint PCS affiliates, but not of Sprint Corp. itself, saying these companies are at the most risk from the early maturity of the industry.
Besides debt issues from AirGate and Alamosa, the Sprint PCS affiliate ratings placed on review for possible downgrade include issues from iPCS Inc. and US Unwired Inc. (UNWR).
High-yield wireless bonds were quoted Friday on a price basis of one to five points lower.
Junk wireless bellwether Nextel saw its 9 3/8% notes due 2009 trade down two points to 59 1/2 bid, 60 1/2 offered.
Other wireless junk bonds were quoted down, but few traded, traders said. The bonds that were already trading into the 20s were hurt less while higher priced wireless bonds fell more sharply.
Airgate PCS' 13 1/2% notes due 2009 were quoted down two points at 23 bid, 25 offered, and U.S. Unwired's 13 3/8% notes of 2009 were quoted down two points to 25 bid, 27 offered.
Dobson Communications Corp. (DCEL) 10 7/8% notes due 2010 were quoted at 66 bid, 68 offered, down five points, Rogers Communications Inc. (RG) 9 5/8% notes due 2011 were quoted down five points at 71 bid, 73 offered.
"The concerns (expressed by Moody's) are largely known, but we share a lot of those concerns," said Aryeh Bourkoff, a high-yield analyst UBS Warburg. "I do believe the wireless telecom sector isn't as bad as the recent deterioration experienced by the wireline telecom sector, but has enough of their own problems to cause concern in the intermediate term," he added.
He said that while companies so far have been able to retain relatively stable pricing, aggressive attempts at gaining market share may lead to pricing pressure in the next year.
"Pricing pressure and leveraged balanced sheets don't mix well," Bourkoff said.
By Nicole Bullock, Dow Jones Newswires; 201-938-2039; nicole.bullock@dowjones.com
(This story was originally published by Dow Jones Newswires)
Copyright (c) 2002 Dow Jones & Company, Inc.
WorldCom lying in bed w/ Arthur Andersen like Enron did previously has sent irrecoverable shockwaves throughout the already failing telecomm/wireless industry. How much of our retirements must we lose?
This is severely one of the major drawbacks to working in the 'public' sector. :splat:-------------------------------------------------------------------------------
NEW YORK -(Dow Jones)- Moody's Investors Service Friday took the latest stab at the wounded wireless industry, delivering a grim outlook and warning of more possible credit downgrades ahead.
Moody's changed the outlook for the entire industry in the U.S. to negative and placed the majority of non-investment-grade U.S. wireless operators on review for possible downgrade. It also changed the outlook for At&t Wireless Services Inc. (AWE) and Nextel Communications Inc. (NXTL) to negative.
"...Recent announcements from Sprint PCS and two of its affiliates have renewed concern at Moody's that the market may already be more mature than expected and that what, in the second half of 2001, could previously have been interpreted as a cyclical slowdown of growth is now more secular in nature," Moody's said Friday.
One week ago, Sprint Corp. (FON) cut the full-year revenue forecast for its traditional phone and Internet business, saying net customer additions to its Sprint PCS (PCS) wireless division would fall as much as 15% below the company's previous estimates. Sprint affiliates AirGate PCS Inc. (PCSA) and Alamosa Holdings Inc. (APS) also have warned they could come up short on net subscriber additions.
During a conference call to discuss a two-notch downgrade of Sprint on Tuesday, Standard & Poor's analysts said they were taking another look at the entire wireless sector as well.
Responding to investor questions about the rating cut for Sprint Corp. (FON), S&P analyst Rosemarie Kalinowski said Tuesday the agency's outlook for the wireless sector had become increasingly negative in recent weeks.
How Much Growth Potential Left?
"I think what's happened is one: there is certainly a fear factor in place, and two, we are seeing a slowdown in subscribers," said Joe Galzerano, a high- yield telecom analyst at CIBC World Markets. "...There is still plenty of room for growth, I believe. Is there enough growth for six major national players and a handful of regional players? That's the question," he said.
What's more, wireless providers have built balance sheets based on year-after- year growth and still have significant capital expenditures to build networks for second and third generation wireless services, Galzerano said.
"And we are not quite sure what the product or content will be that will enable us to use the cell phone for data," he said.
Wireless Bonds Suffer More Selling
Wireless bonds, which already have been hard hit by selling and previous credit downgrades, lost more ground Friday.
At&t Wireless bonds fishtailed, with spreads to Treasurys initially tightening after Standard & Poor's late Thursday affirmed its ratings only to gap back out on the Moody's negative outlook.
At&t Wireless 8 1/8% notes of '12 were quoted 50 to 75 basis points wider with a spread on the bid side from 550 basis points to 575 basis points over Treasurys while Sprint's 8 3/8% notes due 2012 were quoted 20 basis points wider at 505 basis points to 485 basis points over Treasurys.
A basis points is one one-hundredth of a percentage point.
Moody's Friday revised the outlook on AT&T Wireless, whose senior unsecured rating is Baa2, to negative from stable. At&t Wireless is rated triple-B with a stable outlook by S&P.
"For non-investment grade carriers with weaker capital structures, the situation is more acute, Moody's said. "Many of the business plans, particularly of the Sprint PCS affiliates, are predicated on the existence of a larger, more robust wireless market than is likely to occur," according Moody's..
Moody's said the ratings outlook for Nextel Communications, which has a senior implied B1 and unsecured B3 rating, has been revised to negative from stable. The rating agency said that while Nextel's differentiated product will help protect the carrier near term from the slowdown in the overall sector, ultimately that slowdown accelerates the potential for increased competition as the company launches its latest generation technology networks.
Moody's also has initiated a review of the ratings of all the Sprint PCS affiliates, but not of Sprint Corp. itself, saying these companies are at the most risk from the early maturity of the industry.
Besides debt issues from AirGate and Alamosa, the Sprint PCS affiliate ratings placed on review for possible downgrade include issues from iPCS Inc. and US Unwired Inc. (UNWR).
High-yield wireless bonds were quoted Friday on a price basis of one to five points lower.
Junk wireless bellwether Nextel saw its 9 3/8% notes due 2009 trade down two points to 59 1/2 bid, 60 1/2 offered.
Other wireless junk bonds were quoted down, but few traded, traders said. The bonds that were already trading into the 20s were hurt less while higher priced wireless bonds fell more sharply.
Airgate PCS' 13 1/2% notes due 2009 were quoted down two points at 23 bid, 25 offered, and U.S. Unwired's 13 3/8% notes of 2009 were quoted down two points to 25 bid, 27 offered.
Dobson Communications Corp. (DCEL) 10 7/8% notes due 2010 were quoted at 66 bid, 68 offered, down five points, Rogers Communications Inc. (RG) 9 5/8% notes due 2011 were quoted down five points at 71 bid, 73 offered.
"The concerns (expressed by Moody's) are largely known, but we share a lot of those concerns," said Aryeh Bourkoff, a high-yield analyst UBS Warburg. "I do believe the wireless telecom sector isn't as bad as the recent deterioration experienced by the wireline telecom sector, but has enough of their own problems to cause concern in the intermediate term," he added.
He said that while companies so far have been able to retain relatively stable pricing, aggressive attempts at gaining market share may lead to pricing pressure in the next year.
"Pricing pressure and leveraged balanced sheets don't mix well," Bourkoff said.
By Nicole Bullock, Dow Jones Newswires; 201-938-2039; nicole.bullock@dowjones.com
(This story was originally published by Dow Jones Newswires)
Copyright (c) 2002 Dow Jones & Company, Inc.
