Subject: [NEXTEL-1] Nextel's Stock Falls 6.6% After Goldman Sachs Downgrade

From: Marcel <[email-masked]>
Date: Fri, 09 May 2003 12:42:35 -0400

Nextel's Stock Falls 6.6% After Goldman Sachs Downgrade

DOW JONES NEWSWIRES

By Tom Becker

Of DOW JONES NEWSWIRES

NEW YORK -- Nextel Communications Inc.'s (NXTL) stock is down
6.6% after the company's performance was downgraded by Goldman
Sachs Thursday morning.

Shares of the telecommunications' company's stock were down 93
cents to $12.89 on volume of 13.9 million. Average daily volume is
29.2 million.

Analysts said investors are dropping the stock largely due to Goldman's
downgrade to underperfrom/neutral from in-line neutral. Goldman
Sachs also expects the stock to hit the $11 range. "Investors are seeing
the report and understanding Nextel faces some difficult issues," said
Cannon Carr, an analyst with CIBC World Markets.

Goldman Sachs downgraded the stock after Motorola Inc. (MOT)
Wednesday night submitted a spectrum swap proposal to the Federal
Communications Commission, a move that will likely delay a decision
by the regulatory agency on Nextel's own proposal, according to Frank
J. Governali and Robert Barry, the analysts who wrote the report.

"We believe the (Nextel) stock has been discounting approval of the
Nextel proposal this summer, thus a delay is likely to create
disappointment and weakness in the stocks," the Goldman Sachs
analysts wrote.

While Nextel's own proposal is broadly viewed as extremely thorough,
sophisticated and well-researched, there is caution at the FCC to
approve the proposal on an all or nothing basis, the analysts wrote in
the note. The fact Motorola threw its hat into the ring with its own
proposal just gave the FCC more to chew on.

"At the very least, we feel the risk to Nextel has gone up because there
had previously been little organized resistance to its proposal, making
its proposal's acceptance seem almost in the bag," Governali and Barry
wrote. "We understand the FCC staff is actively encouraging alternative
solutions to be submitted, which again, at a minimum creates more
opportunities for delays."

Carr, the CIBC analyst, agrees with that assessment.

"There were already a lot of competing interests and opinions and (with
Motorola's proposal) now there are more," Carr said. "It's going to
take a lot to build a consensus."

A second reason for the Goldman Sachs downgrade is the anticipated
push-to-talk product offerings from Sprint (PCS) and Verizon Wireless this summer and
offerings from
other competitors later in the year, according to the Goldman report.

"Verizon is now the 800-pound gorilla in wireless," the analysts wrote. "At a minimum, the
advertising
push that Verizon is likely to employ will slow down the decision-making process of
customers that might
have been planning on going to Nextel. Realistically, it will take a healthy part of
(Nextel's) growth."

While the Goldman Sachs analysts don't think the offerings will impact Nextel's
traditional customer
base, they wrote that the offerings will immediately impact Nextel's growth opportunity
into new market
segments.

The increased competition likely will raise costs and increase customer churn, CIBC's Carr
said.

"While push-to-talk may not be truly competitive for the first 12 months, the perception
is a competing
product is gaining moment and will force Nextel to bring down prices and could limit their
growth," Carr
said. "That is what's going to concern investors."

Carr doesn't own shares of Nextel and said he is unaware of his company conducting any
business with
the telecommunications company.

Neither Governali nor Barry of Goldman owns shares of Nextel. During the past 12 months,
Goldman
Sachs has received compensation from Nextel for investment banking services.

Later Thursday morning, Wachovia also downgraded its rating on Nextel shares, to market
perform
from outperform.

-By Tom Becker, Dow Jones Newswires; 201-938-2020

Updated May 8, 2003 11:01 a.m.

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