CS First Boston Cuts Western Wireless to 'Hold'

Analyst says the wireless phone company's results missed her expectations, and she's concerned about higher service and equipment costs

CS First Boston downgraded Western Wireless (WWCA ) to hold from strong buy.

Analyst Cynthia Motz says the second quarter $0.18 per share loss was wider than her $0.14 per share loss estimate, and she says churn rose more than her estimate. Motz notes the company expects to see only slight growth in roaming revenues in Q3 and Q4 vs. 2000, which is surprising as this could imply a sequential decline in Q3.

Motz says the cost of service and equipment rose substantially due to Western Wireless's choice to turn to code division multiple access (CDMA) technologies. Also due to the CDMA choice, Motz feels the company reduced its potential to be acquired by some of the most likely candidates. She says it seems competitive pressure and the weak economy are having a negative impact on many rural opportunities for Western Wireless in particular.

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