Sprint PCS Ignites Wireless Rally

Updated from 11:23 a.m. EST

Sprint PCS(PCS Quote - Cramer on PCS - Stock Picks) sparked big gains in wireless shares Wednesday by reaffirming subscriber growth and cash flow estimates for the quarter and year.

Sprint PCS said it expects 700,000 to 750,000 net customer additions in the first quarter and earnings before interest, taxes, depreciation and amortization of about $600 million. The EBITDA figure excludes charges related to closing five marketing centers.

The company also expects first-quarter churn that is consistent with earlier guidance and average revenue per user of $60, also consistent with expectations.

The pronouncement ignited a rally in the wireless sector, with PCS up 20% to $11.47. AT&T Wireless(AWE Quote - Cramer on AWE - Stock Picks) gained 8.6% to $9.27; Ubiquitel(UPCS Quote - Cramer on UPCS - Stock Picks) added 20% to $2.10; SBA Communications(SBAC Quote - Cramer on SBAC - Stock Picks) rose 28% to $3.36; and Airgate (PCSA Quote - Cramer on PCSA - Stock Picks) rose 27% to $13.80.

Leap Wireless(LWIN Quote - Cramer on LWIN - Stock Picks) shot up 35% to $9.05. The stock jumped first on the PCS news then on word Mario Gabelli's hedge fund had raised its stake in the company to 8.75% from 7.73%.

Sprint's other segment, Sprint FON, said it expects its Global Markets division to show sequential revenue and EBITDA growth, "reinforcing the belief that the fourth quarter of 2001 was the low point from a profitability perspective." The Local Division is expected to "continue its steady performance in the first quarter." For the 2002 year, Sprint expects the FON Group to post EBITDA of about $4.6 billion and earnings per share approaching $1.40, excluding ION.