Wall Street turned a jaundiced eye on Nextel's ( NXTL) shiny numbers Wednesday. After
nailing its second-quarter earnings report Wednesday morning, Nextel saw its shares drop 5%. The setback came as surly investors gnashed their teeth about big spending decisions looming at the fast-growing, but debt-laden, wireless service provider. Nextel's conundrum centers on the evolving and closely watched high-speed wireless data arena. If the company stands pat, it risks losing a lucrative share of the business services market. But engaging in a costly network-expansion war, while facing billions of dollars in potential expenses related to a government-backed radio spectrum swap, could break the bank. The threat comes from deep-pocketed rivals like Verizon Wireless -- a joint venture of Verizon ( VZ) and Vodafone ( VOD) -- and Sprint ( FON). Both are charging ahead with network upgrades that will better position them to offer fast mobile Internet access. After a long honeymoon in which Nextel surged fivefold over the space of a year, skeptics have turned their focus on whether the company has reached its peak. Sure, the company is a popular profit leader in a robust industry. But investors know competition in Nextel's lucrative walkie-talkie niche is only growing more fierce. As a result, Nextel shares have stagnated during 2004 in spite of massive gains in users, earnings and revenue. On Wednesday, the stock slid $1.21 to $24.79.