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Strong Signals On A Cellular Play

Inside Wall Street


In 1990, when cellular-phone stocks were hot, even the shares of companies only faintly related to the new technology skyrocketed. Nationwide Cellular Service, then a tiny entry with no earnings in sight, raced as high as 14 a share from 2. NCS is now a major reseller of cellular-telephone services and equipment, with revenues that are expected to hit $115 million in 1992. Yet its stock is stuck at 5 simply because the craze for cellular stocks has cooled.

Not for long, say several analysts. Investor perception may well brighten since NCS, which has 100,000 subscribers, is expected to break even this year and post its first profit in 1992. "Nationwide is an unappreciated cellular company that will be highly profitable by next year," says Ladenburg Thalmann's Richard Rieger.

As an industry middleman, Nationwide has bypassed the heavy costs of constructing and financing cellular telecommunications facilities that the major telephone companies have had to shoulder. Nationwide obtains cellular services at wholesale rates from the major cellular-system operators. Then, it sells these services to subscribers, charging them monthly access and usage fees. It also sells cellular equipment supplied by Japanese and U. S. manufacturers.

That's not all: One big investor says an extra kick should come from one of its divisions--Cellular Technical Services, which went public on Aug. 8 at 4 1/2 a share. Nationwide retained 57% of Cellular, which is expected to earn 50~ a share next year and $1 in 1993. Combined with Cellular's income, Nationwide is expected to earn $1.40 a share next year and $2.25 in 1993. Based on those numbers, Rieger thinks the stock could double in the next 12 months.GENE G. MARCIAL

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