Subject: [NEXTEL-1] Verizon Plans to Release Walkie-Talkie Mobile Phone Next Month

From: [email-masked]
Date: Fri, 20 Jun 2003 02:34:58 -0400

Verizon Plans to Release Walkie-Talkie Mobile Phone Next Month 

June 20 (Bloomberg) -- Verizon Wireless Inc., the largest U.S. mobile-telephone
carrier, will begin selling a walkie-talkie phone as early as next month, marking
the first challenge to Nextel Communications Inc., said people familiar with the
matter. 

Verizon Wireless, based in Bedminster, New Jersey, will sell Motorola Inc.'s V60p
phone and another made by Korea's Samsung Electronics Co., said the people, who
asked not to be identified. 

Nextel has been the only nationwide seller of a push-to-talk phone for the past
decade. Verizon Wireless and Sprint Corp.'s PCS unit have both said they plan to
introduce a similar product this year.  Nextel's customers pay as much as $20 a
month more than others for their service and are less likely to switch providers. 
``That's an attractive place for Verizon to be, and gives their customers another
reason not to switch,'' said Rick van Nostrand, who helps oversee $5 billion,
including 950,000 Verizon shares, at Earnest Partners in Atlanta. 

Nextel is preparing to defend its product. The company trademarked the phrase
``push to talk,'' preventing rivals such as Verizon Wireless from using it to
describe their new phones. Nextel was granted ownership of the phrase in April
after a 15- month review, according to the United States Patent and Trademark
Office. Nextel also filed for a trademark on the acronym PTT. 

Nextel is now contacting companies to inform them of the push- to-talk trademark,
said spokeswoman Audrey Schaefer. That may pose a marketing hurdle for competitors such
as Verizon Wireless, which have publicly used the phrase. Verizon Wireless Chief Executive
Officer Dennis Strigl in February said the company planned a ``push-to-talk product well before the end
of the year.'' 

Nextel's Dominance 

Construction crews and other businesses with employees on the road are among the
biggest users of the phones that also can be used like a walkie-talkie. Nextel's
dominance of those customers helped first-quarter revenue rise 21 percent,
compared with 15 percent at Verizon Wireless. 

Customers of Reston, Virginia-based Nextel pay an average $67 a month for service,
almost $20 more than users of Verizon Wireless. Monthly customer turnover at
Nextel was 1.9 percent, compared with 2.1 percent for Verizon Wireless, owned by
Verizon Communications Inc. and Vodafone Group Plc. 

Jim Gerace, a spokesman for Verizon Wireless, reiterated that the company intends
to release a walkie-talkie product some time this year and declined further
comment. Motorola spokeswoman Jennifer Weyrauch declined to comment. Sonia Kim, a
spokeswoman for Seoul-based Samsung, also declined to comment. 

Pricing Pressure 

Nextel shares, which have risen 50 percent this year, rose 3 cents to $17.34
yesterday. Sprint PCS shares, up 38 percent this year, fell 20 cents to $6.04.
Verizon Communications shares fell 13 cents to $40.11 yesterday and are up 3.5
percent in 2003. 

Verizon Wireless has 33.3 million subscribers, three times the total for Nextel.
Nextel's customer and share price growth may be curbed if larger rivals bring out
copy-cat products, analysts said. 

Competition ``will lead to pricing pressure, higher churn and provide an
alternative'' for customers, said Vik Grover, an analyst at Kaufman Bros. He rates
Nextel ``sell'' and doesn't personally own the stock. 
`Won't Stack Up' 

Officials at Nextel say rival services won't perform as well as Nextel's Direct
Connect phones, in part because they'll take longer to set up calls and there will
be longer delays in transmitting voices. 

``We don't think that that product's going to stack up to what we have,'' Nextel
Chief Executive Officer Tim Donahue said in a June 9 televised interview with
Bloomberg News. 

Nextel customers may not be quickly lured away, said Ned Zachar, a Thomas Weisel
Partners analyst who rates Nextel shares ``outperform'' and doesn't personally own
them. 

``It's not a fait accompli that Verizon will steal customers from Nextel,'' Zachar
said. Motorola, the world's second-largest mobile-phone maker, will supply a phone that
allows users to speak to groups of people as well as individuals. Schaumburg,
Illinois-based Motorola is also Nextel's supplier. 
 
Most Advantage 

The agreement may give Motorola access to a bigger swath of the mobile-phone
market in the U.S., where about 145 million people, or half the population, has a
wireless phone. 

Motorola this month reduced sales and profit forecasts for the year, blaming
excess inventory and the outbreak of severe acute respiratory syndrome in Asia. In
the U.S., Motorola is competing for share with rival Nokia Oyj, which has
introduced new models and plans to double marketing spending this year. 

``Verizon and Nextel are going to have the most advantage over the other
carriers,'' said John Krause, an analyst at Thrivent Financial for Lutherans, which manages $57 billion
in assets and owns 2.7 million Motorola shares and 350,000 Nextel shares. ``That's a win-win for
Motorola.'' 

The phones will be based on technology developed by Winphora Networks, which was
acquired by Motorola in April. 

Motorola also supplies the phones and technology for Nextel's Direct Connect
product. Under a 1994 agreement, Motorola sells its so-called iDEN technology, the
first to combine two-way radio and cellular calling in a single handset, to
Nextel. In return, Nextel buys virtually all its handsets from Motorola. 
Last Updated: June 20, 2003 00:01 EDT

http://quote.bloomberg.com/apps/news?pid=10000080&sid=aR87kKhOmCOM#

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