Nextel Profit Jumps

Churn is down, but so is average revenue per subscriber.
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Nextel

(NXTL)

reported a mostly upbeat third quarter Friday, posting revenue and adjusted earnings that both topped Wall Street estimates on a decline in its customer defection rate. Average revenue per user edged lower, however.

The wireless carrier earned $586 million, or 53 cents a share, in the three months to Sept. 30, up 69% from $346 million, or 33 cents a share, last year. Excluding a tax benefit and a debt-buyback charge, the company earned 39 cents a share, a penny better than the Thomson First Call consensus.

Nextel's revenue rose 18% from a year ago to $3.40 billion, about $30 million above estimates.

Subscribers totaled 15.3 million at the end of the most recent quarter, with subscriber additions totaling 550,000 at Nextel and 195,000 at its Boost Mobile segment. Average revenue per user was $69 in the quarter, down from $71 in the year-ago period, and churn fell to 1.5%. Customer acquisition costs were $519 million in the 2004 quarter, roughly flat with a year ago.

The company forecast 2004 earnings of $2.60 a share, up from $2 a share in 2003. Analysts are forecasting earnings of $1.81 a share for the full year, although the number excluded charges and wasn't comparable to the company's prediction.

The stock was down 12 cents to $25.15 in Instinet premarket trading.