Updated from Jan. 8
One day after several mobile phone names fell on critical comments from Merrill Lynch, J.P. Morgan weighed in with a downgrade of its own Wednesday, lowering
to hold from buy and dropping
to underperform from hold.
The move had less impact than Merrill's, with Ericsson falling 7 cents to $5.39 in early trading Wednesday and Alcatel losing 11 cents to $17.76. Nokia, which suffered a 5.6% decline Tuesday, was gaining 3 cents to $23.90. J.P. Morgan voiced concerns about growth estimates for 2002 and 2003.
In the research note Tuesday, technology strategist Steve Milunovich said Merrill's wireless analysts expect the mobile infrastructure market to be down 5% in 2002, as operators scrutinize capital spending and that pressures pricing. They said Ericsson was the most vulnerable stock in the group.
Shares of Ericsson dropped 18 cents, or 3.19%, to $5.46 on the news Tuesday, while Nokia shed $1.43, or 5.65%, to $23.87, and
fell 37 cents, or 2.44%, to $14.80.
Since a bottom on Oct. 1, Merrill said its wireless index has run up 78%, with Ericsson and Nokia each higher by more than 50%. But the firm is concerned about handset demand in the early part of 2002.
"Nokia could pull back if investors reassess the first-quarter handset estimate of 95 million with an absence of new product introductions and seasonal softness," Milunovich said in the note.
Back on Dec. 11, Nokia calmed investors who were afraid of a warning in its midquarter update by saying that it would hit the high end of its 16 cents to 18 cents per share earnings guidance for the fourth quarter and possibly even exceed those estimates. Nokia reports fourth quarter earnings on Jan. 24.
In another wireless development, Motorola was ordered by a judge to pay $300 million to
and other lenders to meet the minimum obligations of a loan for its now-bankrupt satellite phone division, Iridium.