Update from 11:22 a.m. ET
tumbled to a new low Tuesday after
Salomon Smith Barney
slashed its rating and 12-month price target to $35 from $48 a share.
analyst John Bensche also lowered his price target on Nextel to $48 from $69, citing "concern over Nextel's uncertain path to broadband."
The analyst actions follows a
warning last week by Nextel that higher operating expenses could hurt first-quarter results.
Nextel shares lost $3.25, or 12.8%, to $22.19 in recent trading on the
. The shares are sharply off their 52-week high of $82.94.
Salomon downgraded Reston, Va.-based Nextel, a digital mobile phone operator, to outperform from buy, citing a rise in churn, which refers to the number of subscribers who leave and the cost associated with replacing them. Churn was 2.25% in the fourth quarter.
The company's fourth-quarter operating cash flow of $420 million also missed Salomon's estimate of $428 million.
Lehman's Bensche kept his market perform rating on the company. However, he lowered his projections for the company's earnings before interest, taxes, depreciation and amortization, or
EBITDA, for 2001 to $2.1 billion from $2.7 billion.
Citing the company's 2001 projections for accelerating cash flow growth in the second half of 2001, Bensche said, "no specifics were offered as to why the stalled momentum in the financials would reverse itself in the year," adding he was concerned that "further downward revisions could be in the offing."