Nextel Posts Higher Revenue From New Subscribers

The company beats analyst estimates as it posts higher revenue.
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Updated from 1:33 p.m. EDT

Nextel

(NXTL)

made itself busy in the first quarter, keeping its investor bosses off its back.

The company was rising at midday after the company beat analyst estimates on higher revenue as more new customers signed up for its services.

The debt-laden wireless carrier shined its shoes and showed off a clean desk Wednesday morning, reporting strong results before the market opened. Nextel hopes take off another $300 million from its trimmed infrastructure spending in 2002, keep signing up increasing numbers of customers and become cash flow positive by 2004. While investors may not be totally pleased with Nextel's dicey balance sheet, Wednesday's display of pluck buys it some time.

The wireless phone service provider posted a pro forma loss of $279 million, or 35 cents a share. Analysts polled by Thomson Financial/First Call were expecting a loss of 40 cents a share for the quarter.

The shares were recently up about 2% at $6.07.

Including charges relating to restructuring and accounting changes, the company lost $654 million, or 82 cents a share, compared with a loss of $428 million, or 56 cents a share, last year. Quarterly revenue rose to $2.2 billion from $1.7 billion a year ago.

In its first quarter, Nextel stayed on pace for full-year goals for earnings before interest, taxes, depreciation and amortization (EBITDA) with a 9% sequential jump to $586 million. Nextel believes it could exceed its goal to turn in $2.5 billion EBITDA for the full year. At the same time, the company overcame the increasing saturation of the U.S. market by signing up 502,000 subscribers, slightly better than the fourth quarter's 501,000 new faces, en route to 2 million forecast additions in 2002.

Nextel offset a $1 quarter-over-quarter slip in its average revenue per user per month to $68 by trimming its cost per added customer by $8. The carrier also kept a tight watch on its capital expenditures, outlaying a slimmer $474 million in the quarter. Previously, Nextel believed it would spend $2.3 billion to help its network keep up with callers, but CEO Tim Donahue said it probably could pare that down to $2 billion.

Nextel proudly announced that it reduced cash flows in the quarter by 19% sequentially, progress that surely helped the carrier's shares to move up 7% in Wednesday morning trading to $6.26. Management believes that with $3 billion in cash and equivalents and $1.5 billion in credit, the company will end the year with $2 billion at hand. Still an exciting way to run your finances, but at least with a clean first quarter the carrier staved off its demons for the next three months.

Staff reporter Michael Dunn contributed to this report