Wireless Carriers See Stock Jump
Wall Street bid up shares in mobile phone providers Wednesday in anticipation of increased cell phone sales and subscriptions because of last week’s terrorist attacks.
Wireless phone companies AT&T; Wireless Services Inc., Sprint PCS Group and Nextel Communications Inc.--three of the nation’s largest carriers--saw their shares close up 3% to 7% on Wednesday.
Sprint PCS rose 90 cents to $24.78, AT&T; Wireless jumped $1.02 to $15, both on the New York Stock Exchange, and Nextel increased 59 cents to close at $9.90 on Nasdaq. And Verizon Wireless’ parent company, Verizon Communications, saw its shares rise $2.20 to $53.90 on the NYSE.
Among phone makers, Nokia rose 84 cents to $16.06, Motorola increased 3 cents to $15.48 , both on the NYSE, while Ericsson fell 3 cents to close at $3.47 on Nasdaq.
Analysts said the stock uptick reflects growing anecdotal evidence that consumers who have never owned a cell phone are heading into stores after learning how passengers on the doomed planes and workers in the World Trade Center used cell phones to reach family and friends. Others cited cell phones as being critical in lower Manhattan, where phone service has been disrupted.
“Wireless companies and their vendors are saying that people are rushing out and buying cell phones after this tragedy,” Guzman & Co. analyst Patrick Comack said. “People want to have a cell phone at all times in case of emergency now.”
Comack said mobile phone vendors sold a month’s worth of phones last week.
Credit Suisse First Boston analyst Cynthia Motz said wireless phone companies also saw a surge in minutes billed after last week’s attacks.
Clay Owen, a spokesman for Cingular Wireless in Atlanta, said the company saw increased sales in certain areas, including Philadelphia and San Diego, but sales were normal in other places. On Wednesday, Jimmy Nguyen of Irvine went to a Best Buy store in Costa Mesa to change service providers.
“There’s a lot of dead [coverage] areas in Irvine near my house,” said Nguyen, who has service with Cingular Wireless, but is switching to Sprint PCS. “We heard a lot of people called out with their cell phones during the emergency . . . I want to switch to a company where I’ll be sure to have coverage.”
Even so, analysts caution that any short-term sales jump probably won’t alter the industry’s outlook.
“We don’t really see this accelerating any type of overall demand,” said Tim Burke, an analyst at Edward Jones.
Burke said he expects wireless carriers to continue booking subscribers “at a record pace” in the United States, where cell phone penetration rates lag far behind Europe. Analysts expect the U.S. cell phone penetration rate to grow this year to 45% of the population, up from about 38%.
Wireless phone shipments by manufacturers have plunged so far this year as the economy has slowed.
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Reuters was used in compiling this report.
