The bad-headline risk is growing at Nextel ( NXTL), an analyst warned.

Goldman Sachs downgraded Nextel on Thursday, citing an unattractive risk/reward situation based on expected negative news in the next few months. Shares fell 6% to $12.99.

Goldman downgraded Nextel to underperform from in-line based on increasing uncertainty of the company's presence in the spectrum swap and push-to-talk markets. "We believe the market will increasingly focus on the imminence of push-to-talk competition in the June/July time frame from both Verizon and Sprint PCS," Goldman said in a research note.

Nextel is in a bidding war for wireless bandwidth that involves swapping old spectrum with the FCC in an effort to reduce interference on airwaves that are used by police and other public safety groups. Goldman noted in its report that Motorola ( MOT) on Wednesday submitted to the Federal Communications Commission an alternative to Nextel's proposed swap, which could delay the FCC's decision on Nextel's proposal.

The FCC can accept Nextel's spectrum swap proposal or delay making a decision for as long as it wants, Goldman noted, adding that it believes a delay is imminent. Goldman said it believes Nextel could fall below its $13 to $14 full value range for a prolonged period until the uncertainty is resolved.

"While the Motorola proposal doesn't seem to answer all the issues concerning interference, at minimum, it would seem to provide support for those at the FCC who would rather study the issue longer, than make a decision sooner," Goldman said.

Goldman forecast Nextel EPS of $1.05 for full-year 2003 and $1.07 for 2004. Analyst consensus is 91 cents a share in 2003 and $1.19 a share in 2004. The company lost 5 cents a share in 2002.

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