Sprint (FON) chief Gary Forsee is billing the Nextel (NXTL) deal as strength building on strength.

Forsee, set to become CEO of the combined Sprint Nextel, crystallized his pitch to Wall Street with the customary merger math. Pointing to the company's technological advantages and growth prospects, Forsee made the familiar case that one plus one equals more than two.

Of course, that's an understandable spin on a

union that will create a much larger No. 3 player in a still-expanding wireless market. Analysts applauded the deal, largely because it puts both companies in a better position than they would be without the combo.

"I'm not saying one plus one equals four, but there are some advantages to this," said one analyst on hand at the press conference Wednesday. "Wireless is the right direction, and they'll get good cost cuts and savings on capital spending," added the analyst, who asked not to be named.

But on Wednesday, investors turned skeptical on a deal they had clearly favored for the better part of a week, sending both stocks down 4%. Skeptics say Forsee's take on the deal glosses over some key weaknesses, like Nextel's fading success and Sprint's struggles as the distant third-place contender in a cutthroat business services market.

In fact, some observers say the merger beautifies some of the major flaws with the companies.

"Now, the business services division becomes a much smaller piece of the equation, and growth in wireless will deflect attention from that," said a money manager at the conference who is long both stocks.

To go a step further, some industry watchers were asking about the timing of the deal and whether some underlying pressure -- perhaps a weak quarter or a dismal outlook for 2005 -- was forcing the players' hands. Nextel, for example, has been trading recently at a three-year high, despite last quarter's slip in cash flow and drop in average revenue per user.

Nextel also faces a daunting tab as it plans to upgrade its network for the so-called third-generation suite of fast wireless data capabilities. Investors and analysts say Nextel's walkie-talkie advantage and loyal following had taken the company to a level of success it probably couldn't sustain, given challenges of new services and broader pressure from No. 1 and 2 players

Cingular

and

Verizon Wireless

.

But Sprint and Nextel executives see it a bit differently.

Nextel CEO Tim Donahue says the two companies started network compatibility discussions a year ago and that merger talks began in earnest in April, soon after the expiration of a noncompete agreement Sprint's Forsee had with

BellSouth

(BLS)

.

"This became compelling to me as the valuations of the two companies aligned," Donahue said in an interview after the presentation.

As for the future of the combined company, a number of questions linger. Nextel's iDEN network is incompatible with Sprint's CDMA system, and the combined company doesn't expect to have a dual-mode phone that works on both by the end of 2006. The executives said that until they worked out a combined-services offering, consumers would have a choice of services.

On wireless wholesale, the company will continue to seek partners in areas where the business couldn't normally reach. For example, Donahue says he thought cable was a significant opportunity as a wholesale business or as a joint venture, which would allow cable companies to bundle wireless services into their offerings to consumers.

Some analysts say they are optimistic about the wholesale prospects for Sprint-Nextel.

"It's a great way to pull in new revenue and fill the network," said one of the unnamed Wall Street analysts Wednesday.

Few observers expect pending chairman Donahue to stick around for long. Though Forsee and Donahue made promises of compatibility both on and off the golf course, it's rare that two hard-chargers can share top billing for long.

Notably, in May, after merger talks with Sprint were under way, Donahue started a so-called 10b5-1 stock selling program, a departure from his previous buy-and-hold strategy. Last week, Donahue netted $2.8 million, bringing his 2004 stock-sale take to $32.8 million.

"Donahue has done his job," said one analyst, referring to the Nextel's chief success in taking a debt-laden niche player to the big leagues. "They had the worst network and yet they did the most with it. He can certainly walk away from this as a victory."