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Following is a list of debt and financial ratings changes for wireless companies announced this week by financial firms.
- Merrill Lynch upgraded its view of the overall technology market from underweight to market weight, saying the firm’s recent changes on the Internet and wireless sectors to overweight might indicate better overall tech stock performance ahead.
- Standard & Poor’s Ratings Service said a share repurchase plan by Motorola Inc. of up to $4 billion in common stock will not affect the ratings agency’s credit rating and outlook for the vendor. S&P said Motorola should have the financial flexibility to execute the repurchase without affecting its ability to meet operational needs. S&P noted it believes it could raise Motorola’s ratings this year.
- Pacific Growth Equities upgraded its rating for Intrado Inc. from equal weight to overweight following news that the Federal Communications Commission voted to require Voice over Internet Protocol providers to enable full E-911 capabilities within four months. The firm said Intrado stands to benefit from the decision due to its position as a supplier of E911 services to RBOCs. Pacific Growth Equities said it expects VoIP providers to quickly sign agreements with RBOCs, which control the national E911 network for access to the E911 system.
- Standard & Poor’s Ratings Service kept its rating on Leap Wireless International Inc. on CreditWatch with negative implications, where it was placed in April, despite the company’s recent 10-K filing. The company has yet to file its 10-Q for the first quarter as required under terms of its bank loan, said S&P. The ratings firm said a negative outlook could be assigned to the company. “The company has not yet provided good clarity on its funding plans for buildout and launch of wireless markets covered by FCC spectrum licenses obtained in broadband PCS Auction No. 58 in early 2005,” said Standard & Poor’s credit analyst Catherine Cosentino.
- Merrill Lynch said the wireless industry during the first quarter delivered mixed results, with better-than-expected subscriber growth and declines in average churn, but flat EBITDA margins and higher average costs of acquisition. The commentary was part of the firm’s “North American Telco and Cable Scorecards” report for the first quarter.
- CIBC World Markets raised its stance on the wireless sector to overweight. CIBC said the handset segment should see solid growth while infrastructure will face a gradually more challenging market. CIBC said its top picks in the sector are Qualcomm Inc., Motorola Inc., Skyworks Solutions and Stratex Networks. It also favors shares of sector-perform-rated Nokia, Ericsson, Powerwave Technologies and RF Micro Devices.
- Raymond James downgraded its rating on tower company Global Signal from outperform to market perform based on the company’s valuation. Raymond James analysts said the believe the tower industry outlook remains favorable, and the Global Signal’s management continues to execute at a high level, but it believes shares of the company are now fairly valued at current levels. The firm further said it could become more favorably inclined toward the company if it shows evidence of an acceleration in the acquisition pipeline.
- Standard and Poor’s raised its rating on American Tower Corp. from B- to B. The company’s rating remains on CreditWatch with positive implications.
- Merrill Lynch upgraded its opinion on Analog Devices Inc. to buy from neutral and established a $42 price objective. The company’s shares are trading near a two-year low, which Merrill Lynch said is cheap enough to merit a buy recommendation. Merrill Lynch said it believes the company’s year-over-year revenue growth and margins are bottoming, and it has increased confidence in the company’s ability to meet near-term forecasts.
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