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Looking for a flashpoint in a hot wireless earnings week? Keep an eye on




The Reston, Va., cell-phone service provider has made plenty of believers with its performance over the last two years. But as is the case throughout tech, the company finds itself facing rising expectations this summer -- a situation that Wall Street knows can be fraught with peril.

To be sure, a lot of things clearly are going well for Nextel, whose shares have surged fivefold since the summer of 2002. The company has posted blowout numbers quarter after quarter over the past year. A new credit line, a favorable spectrum swap decision and the continued popularity of walkie-talkie service all seem to bode well for a strong second-quarter report Wednesday morning.

But the ranks of Nextel skeptics have been growing steadily as well, as the company approaches some expensive decisions. In fact, any weakness in Nextel's key performance areas -- namely subscriber growth and average revenue per user -- could sharpen the questions management faces. For all its well-chronicled gains, after all, the company still faces heavy debts, increasing competition and costly upgrades.

These concerns have weighed on the stock this year. Unlike last year, when its shares doubled, Nextel has spent 2004 sputtering. It was up 13 cents Monday at $25.92, putting it down 7% for the year.

Shooting Stars

Nextel isn't the only wireless juggernaut reporting this week. Other big players coming to bat Wednesday include

AT&T Wireless


, heading for a year-end buyout at the hands of rival


; Swedish gearmaker



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, whose shares have cooled after a red-hot start to 2004;



, which earlier this month pinned down a key upgrade deal with

Verizon Wireless

; and chip giant


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Like the suddenly struggling Net sector, the wireless sector leaders have come under pressure recently. Another earnings disappointment last week from handset king


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certainly didn't help matters. But even the solid companies, such as Nextel and Qualcomm, have mostly seen their shares stagnate despite generally positive news.

Such has been the case with Nextel. Last week, the company refinanced some of its $10 billion in debt by replacing a secured loan and credit line worth $2.6 billion with a new $4 billion credit line. Earlier this month, aiming to help clear up interference in emergency services' air waves, the Federal Communications Commission approved a radio frequency swap that gives Nextel a swath of 1.9 megahertz spectrum in exchange for $4.3 billion worth of 800 megahertz licenses.

Both those deals were largely positive for Nextel, but investors couldn't get past the caveats. In the case of the spectrum swap, Wall Street sent Nextel shares lower because the agency's decision could cost the company some $1.5 billion beyond the amount it had budgeted for the move.

Busy People

Even so, there's a fair amount of good news coming from Reston. Only



and Verizon Wireless -- a joint venture of


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-- have presented themselves as major challengers to Nextel's two-way radio dominance, and so far the efforts have been lackluster. Nextel's signature push-to-talk feature has helped the company command the highest monthly service charges among the top six telcos and claim the most loyal customers.

Some industry observers say Nextel may even improve on that score by posting a monthly customer defection, or churn, rate of 1.4% for the quarter ended in June. That would be one of the company's lowest rates ever and a far cry from the 3.7% rate of departures at troubled AT&T Wireless last quarter.

Financially, Nextel is expected to post earnings of 50 cents per share on $3.2 billion in sales. That's roughly flat with the prior quarter ended in March, though almost double the profit of a year ago. Nextel was also expected to add about 500,000 new subscribers last quarter; anything higher will be seen as evidence of solid growth.

Nextel's numbers are likely to be good. Whether they'll be good enough for an increasingly finicky Wall Street remains to be seen.