Updated from 11:16 a.m. EDT

Wireless investors took out their recent frustrations in a double-digit rally Tuesday following upbeat earnings from

Sprint PCS

(PCS)

. A few analysts said the partying got a little out of hand.

Wireless stocks tend to react wildly to news good and bad because every additional dollar of revenue has a major impact on the bottom line, said William Blair analyst Bill Benton. While fixed costs for initial investment in developing networks are high, maintenance and connection costs are minimal while revenue comes monthly and is locked in through long-term contracts.

Sprint PCS, the separately traded wireless unit of telecommunications company

Sprint

(FON)

, posted a narrower-than-expected loss in the first-quarter and said it was on track to meet subscriber-acquisition targets. Pricing declined slightly, with $60 average revenue per user per month in the quarter. Shares of the company surged 24.15% to $12.44.

Others shot up in sympathy.

AT&T Wireless

(AWE)

surged 11.5% to $9.20. Cingular operators

BellSouth

(BLS)

and

SBC Communications

(SBC)

rose 6.25% to $34 and 3.2% to $34.54, respectively.

Digital wireless company

Nextel

(NXTL)

gained 32% to $5.92.

Verizon

(VZ) - Get Report

and Britain's

Vodafone

(VOD) - Get Report

jumped 5.34% to $43.59 and 5.96% to $17.79, respectively.

Sell Through

A few skeptical analysts noted that additional dollars of revenue at Sprint PCS don't necessarily mean more money sectorwide. Sprint PCS has outperformed its wireless peers for the last 15 straight quarters, Blair noted, mainly because it has a broader range of customers. And while sector stocks might look cheap after falling sharply in the past six months -- some stocks have fallen as much as 50% since the beginning of this year -- the concerns about subscriber growth and pricing pressure that got them there remain.

"These stocks will have short-term bounce, but after the euphoria wears off, investors will see that the industry structure hasn't changed. There are five to six players beating the heck out of eachother. And while valuations are low, the industry structure that got them there hasn't changed," said Blair.

Analysts are now expecting 17 million new subscribers in 2002, down from forecasts of 20 million at the end of last year, he said. Where prices will go is harder to determine, Blair said.

Not All Good

AT&T Wireless pre-announced just last month, citing pricing pressures. The company reports earnings on April 23. Meanwhile, Cingular, the No. 2 U.S. mobile phone company and a joint venture between BellSouth and SBC Communications, rolled out a more aggressive pricing plan in the first quarter.

"While Sprint is not feeling pricing issues, some of the other carriers are," said William Power, Robert W. Baird & Company analyst. "I think the Sprint PCS outlook was very positive, and it's the first bit of good news from wireless, and all of telecom in a long time. But Sprint is positioned to outperform the rest of the group," he said.

The rest of the telecom sector also rallied Tuesday after Sprint PCS' parent Sprint beat first quarter earnings estimates by 2 cents. Sprint gained 20.3% to $16.21. Rival

WorldCom

(WCOM)

tacked on 22.3% to $6.20.

Exclusive Sprint PCS providers

Airgate PCS

(PCSA)

and

Ubiquitel

(UPCS)

rose 27% to $16.94 and 23% to $2.18, respectively.

Wireless equipment maker

RF Micro Devices

(RFMD)

added 7.8% to $20.20. Broadband and Internet communications stocks

Broadwing

(BRW)

and

Qwest

(Q)

rose 9.9% and 13.2%, respectively.