JP Morgan Cuts Sprint PCS to 'Market Perform'

The wireless service provider sees less than expected subscriber additions

JP Morgan cut Sprint PCS (PCS ) to market perform from buy.

Analyst Thomas Lee says the net additions shortfall is due to weakness at Radio Shack and business markets demand that would lead to an overall 20% reduction in gross additions. While he lowered his net additions estimate to 575,000, the Street was expecting net additions of about 600,00 to 650,000; Lee says the magnitude of the downside is astounding, and the misstep reduces his confidence in Sprint's execution.

Lee cut the three million 2002 subscriber growth estimate to 2.5 million and keeps his 1.5 million 2003 net additions estimate. He also cut his $4.05 billion 2003 EBITDA estimate to $3.9 million. Lee says any remaining confidence in the wireless group is likely to be reduced.