RESTON, Va.-Responding to a J.P. Morgan report questioning its financial reporting practices, Nextel Communications Inc. released a statement intended to assure investors that the carrier’s financial results were legitimate.
J.P. Morgan analyst Thomas Lee said the company would like to see a number of improvements in Nextel’s financial reporting including the recognition of bad debt expense, customer churn and timing benefits linked with one-time adjustments.
“Our analysis suggests that Nextel is probably understating its current (customer turnover) rate by about 30-40 basis points and bad debt by as much as $22 million in second quarter 2002 alone,” Lee said in his report.
Nextel said the analyst report was based on an “over-simplified model and erroneous assumptions related to the company’s churn policy and bad debt expense.”
“In this era of heightened concern over the accuracy of financial reporting, Nextel finds this analyst report to be misleading and reiterates that the company’s policies and methodologies are sound,” the company said in a statement.
