Wireless names were the topic of conversation in the secondary market last week, with Nextel Communications leading the pack. "Strong results caused the market to tick up," one investor said, referring to Nextel. Indeed, the name rallied from the high 70s after the company announced promising second quarter results last Tuesday. Some market players claimed that the paper traded as high as 86 after the news, but others said it peaked in the 85-85 1/2 range, trading into retail. The highest Street trade was 84 7/8.
By Wednesday, Nextel had settled back to the 83-84 level. One dealer suggested that the name had backed up because of technical pressures. Many investors took the opportunity to sell the paper when the levels ticked up, causing the influx of paper to drive the market back down, he explained.
Although Nextel reported its first positive net income and noted an increase in domestic revenues, some market players are skeptical that the name will continue to reap good news. "The company definitely spun the numbers the right way," one dealer said. "[But] it may have some trouble getting to where analysts want it to be by the end of the year." A trader noted that uncertainty surrounding the company's future capital expenditures is concerning. Calls to Paul Saleh, cfo, were referred to a spokeswoman, who did not return calls by press time.