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PCS @ $12.24. I know what you mean. The value of this deal for PCS makes me think there is something we don't know about PCS that is not right.
However, hopefully William Power at R.W. Baird is right in stating "that PCS's in being valued at $12.60 to $16 per share." I guess Friday's close will tell us something. Today's price action was horrible.
Only mediating factor is that Linquist holds about 5.3M shares of PCS, he has his fat in the fire here.
Interesting comment by Joel West: "So instead of being paid $39b to exit (failed ATT deal), DT is paying $1.5b cash to build up a more stable company. I would presume that DT hopes that it will be able to gradually unload its 74% holding in the combined company through open market sales." From his 10/3/12 Seeking Alpha article "T-Mobile's Exit Strategy."
So in the long run is DT just finding a way to exit the U.S. wireless market, using PCS as a pawn?
T-Mobile's exit strategy: http://seekingalpha.com/article/902501-t-mobile-s-exit-strategy
Hard to believe because Linquist still owns about 5.3M shares of PCS. Still, I do not understand "Mr. Markets" reaction to the deal, nor do I understand the deal itself.
PCS has about $6.50 per share in cash alone, so right now at about $12.25 they are valuing PCS at less than $6 a share. As soon as the majority of the network upgrades are done, PCS will be a cash cow, especially if you cut some of the debt expenses.
How true! PCS and T-Mobile are both migrating to G4-LTE, there might be some indigestion at the beginning but in end both are headed to the same wireless technology. The Sprint/Nextel technology were two different, non compatible wireless technologies with no chance to migrate together.
Unfortunately I do not understand this deal and apparently neither does "Mr. Market."
$13.57 was yesterdays close, see where we close today.
Well, "Mr. Market" does not like the deal, in a.m. PCS off about -$0.71 to about $12.85:
http://finance.yahoo.com/news/sprint-left-behind-metropcs-joins-142011545.html
Interesting to see were PCS closes today.
9/28 T-Mobile sold rights to it's towers for $2.4B, this was last Friday.
PCS has about $2.35B in cash. Together that is $4.75B.
ATT gave T-Mobile about $3B in cash plus another $1B in "assets" for the failed ATT-T-Mobile deal.
PCS has about 364M shares outstanding: 364 x $14.50= $5.02B. The deal by T-Mobile for PCS almost pays for itself.
You're right, Sprint should (maybe they still can) have bought PCS, both are CDMA and migrating to G4-LTE. However Sprint has too much debt already. They are finally winding down the Nextel disaster and working on their G4-LTE network.
Maybe Sprint thinks they have enough on the table already. They had a deal in place for PCS and Sprint's B of D waked away from it.
Yes, T-Mobile is GSM and PCS is CDMA, but both are migrating to G4-LTE, so eventually the wireless network compatibility problems will be mute.
I am a T-Mobile customer. The complex where I shop has a T-Mobile store which is currently being renovated, which surprised me. Part of the synergy of this deal, if it is finalized, is the combining and reduction of store outlets.
PCS has about $2.2B in cash, or about $6.45 a share. PCS has about 9.3M subs. T-Mobile has been losing subs for about two years. IMO this deal is a no brainer for T-Mobile.
Besides T-Mobile is using the $3b+ ATT paid them to help finance more half the deal.
volte; 1m LTE, churn 1%: http://www.bgr.com/2012/09/21/metropcs-volte-service-4-to-6-months/
PCS @ $11.63. As per stockcharts.com agreed that PCS is currently overbought.
Today's price action is strange, 1st hour PCS hit high of day at $12.48 on 1st hour volume of about 3.5M shares, then sold off for the rest of day on about 21M shares traded.
TA Associates started selling again this week 100's of thousand of shares of PCS, looks like they might sell out of PCS as they have less than 300K shares left, see NASDAQ.com PCS insider trades. TA was involved with PCS before public offering.
PCS @ $9.76. Blew through Q2-12's high of $9.21 on strong volume today.
Article on Leap; comments by skibimanex are interesting:
http://seekingalpha.com/article/785591-leap-wireless-a-sale-of-the-company-may-be-on-the-way?source=yahoo
"The investment community instead focuses on operating cash flow, what company calls OIBDA (Operating Income Before Depreciation and Amortization), OIBDA margins, free cash flow, and operating metrics (Performance Metric), that are indicative/predictive of future financial results."
Operating Cash Flow;
OIBDA (Operating Income Before Depreciation and Amortization);
OIBDA margins;
Free Cash Flow and
Operating Metrics (Performance Metric).
This is fundamental analysis.
Compare with technical analysis, (reading the stocks price action on the charts.) See: Murphy, "Technical Analysis of the Financial Markets," and Kahn, "Technical Analysis Plain and Simple."
GL
Q2-12 all good except for the 186K loss of subs, which is the first quarter of not adding subs. Only 2% loss, but troubling.
PCS Q2-12; 41 cents per share earnings on $84.3 million, versus 23 cents per share a year ago. Net income was $148.8. Revenue for was up to 6 percent to $1.28 billion.
Finally a good quarter!
PCS @ $5.59; hit new all time low today, $5.53. Incredible!
stockcharts.com p&f chart for PCS in the gallery view has a double bottom breakdown on June 11th and a target price of $0.50, which is just a probability target price from the p&f computations.
IMO PCS needs to show the money in earnings. Until we get back to hitting hitting EPS estimates, we have missed three of the last four earnings estimates, we are stuck.
Linquist said PCS needed about a $150 G4-LTE android phone(s) to attract subs. Now they have one. Time will tell.
@ $6; new 52 wk low $5.97 today. Yikes.
New G4-LTE $150 phone, after $50 rebate from PCS.
http://finance.yahoo.com/news/metropcs-introduces-latest-4g-lte-120000831.html
Not latest Android version and smaller screen, but this is what PCS needs so badly, G4-LTE phones at about $150.
@ $6.08, below cash per share of $6.10!
$6.40 May close. Big 2.1M shares traded in last two minutes today on an up-tick. I am calling this the low for PCS, after almost trading down to it's cash per share value of $6.10 ($2.2B) today, source: Yahoo.
All depends if the Fed goes to QE-3 or not re: market collapse. IMO if Fed goes to QE-3 they will put off the eventual market collapse to a later date, a year or years ahead.
Re: buy-out. ATT and t-Mobile are GSM but are both moving to G4-LTE, whereas PCS is CDMA and G4-LTE. VZ is CDMA moving too G4-LTE, but IMO PCS is to small for them. S is still a mess after Nextel merger and has too much debt to buy PCS, but it would probably be the best fit.
8/2011 fall from >$16 was a paradigm shift for PCS to the negative. Run-ups always go to far (to >$18), run-downs always go to low (to <$7). When the tide is coming in, all boats rise; when the tide is going out, all boats go lower.
PCS needs to "show me the money," which it did not do in Q1-2012.
Analysis lowering 2012 estimates is killing PCS right now, even if analysis are usually "wrong." Moorman at S&P has lowered 2012 estimate to $0.25 from $0.89, because of Q1-12 earnings miss of $0.06. If his forecast is right for 2012 earnings, this would be the lowest yearly earnings for PCS since 2007. This is why PCS is very near it's 52-week low right now.
Heck, I can remember about two years ago when analysis were saying PCS' spectrum was worth >$10 a share!
Book value >$8; >$6 in cash.
@ $6.45. Book value $8.16; cash per share $6.10 ($2.2B); debt $4.78B. (source: Yahoo)
@ $6.73. $6.32 is 52 week low.
They are throwing the baby out with the bath water right now re: PCS, which is at about $7. Over $8 book value and over $6 in cash (and about $4.8B in debt too). Still, it is time for PCS to "show me the money."
I have no data to respond. Time will tell.
AP is reporting an all stock deal by DT (T-Mobile) for PCS, which has 363.2M shares outstanding.
@$10 a share= $3.632B
PCS has $2.2B in cash, making the value of the deal at $10/shr at $1.41B, less PCS' debt, which is over $4B and booked to 2016.
PCS has EBITA of $1.27B (ttm).
So DT spins off T-Mobile, which is then listed on NYSE after merging with PCS. Could be a brilliant move by DT, remember T-Mobile just received about $3B from ATT in $ and spectrum for the failed ATT bid for T-Mobile.
The dice are rolling ...
PCS @ $7.50. Didn't like today's price action, even with the big gain. Today's high was $8.45, so much of the 32.9M in volume was on the sell. Time will tell.
Posted by xgrk88a on Yahoo PCS mb:
"I believe the T-mobile / PCS buyout is real and likely to happen...
To start with, T-mobile and PCS are building on the same band. About 50% of PCS is on the 1900 mhz band...
http://forum.xda-developers.com/archive/...
and this shows that t-mobile is building their 1900 mhz...
http://www.technobuffalo.com/companies/a...
The reason that t-mobile is building out its 1900 mhz is because it needs it for its iPhone launch. With the purchase of MetroPCS, it will give T-mobile more 1900mhz spectrum. Who knows, T-mobile could ditch the low end customers at PCS and convert 100% of the 1900mhz to spectrum for the iphone (and increase ARPU greatly).
Additionally, Here are the value per user based on the major carriers:
PCS
7.8 billion market cap
9.3 million subs
$301 value per sub
VZ
$114.760 billion market cap
$95.825 value of wireless market cap
93 million subs
$1030 value per sub
T
$193.130 billion market cap
$121.672 billion value of wireless
92.8 million subs
$1311 value per sub
T-mobile
$48.720 billion market cap
$12,180 billion associated with t-mobile
33 million subs
$370 value per sub
I realize there are just rough numbers I have compiled based on a quick google search, but they should be close.
A merger of the two could create a close 3rd place player. Sprint could be purchased next in the roll up (with a value of only $131 per sub since they're losing money). A valuation of $700 per sub should be fairly quickly realizable by T-mobile after DTEGY floats a tracking stock. That would be a double of the valuation for T-mobile based on current prices of PCS. I would expect a buyout price of at least $12 based on my metrics.
This would be a smart move for T-mobile. Expect it to happen."
S&P "Proprietary model" has a "fair value" for PCS at $10 a share as of 5/5/12.
IF buy-out is the real deal, about $11-12 a share, depending on terms of the deal, cash, stock etc.
No personal attacks. I did not catch your post in time to delete it, but one more attack on another poster on this mb and you are banned. bowonwing
less expensive "smartphones" is the pipe?
posted by gggl on the AXTI Yahoo mb: re-posting b/c: 1) some have said the key to PCS' success is sub $150, or less, "smartphones," in 2012 and beyond, I agree; 2) <<It is now abundantly clear from Apple as well as Qcom that there is a shortage of a very specific component that is "limiting" smartphone grwoth (sic). Likely Skyworks is the fabber of this component. However, this means that the rest of the components used to make smartphones are becoming much more readily available and even worse potentially stockpiling >> perhaps less costly smartphones are in the pipeline when this issue is resolved? Maybe good for PCS?
"Like I said I am outta here because people here ignore reality and then there are some that just want to censur me because they think they are doing other people a service.
First, the recent price declines and downgrades are no surprise at all. Take a look at the charts for TQNT and AVGO in the days prior to the TQNT CC, they clearly show major breakdowns of 2 of AXTI's major customers before the TQNT CC.
Then remember AXTI generates revenue from commodities and has at times large currency effects. In Q1 prices for Gallium continued to decline and the yen strengthened significantly, this means less revenue per volume on raw materials (a hit to revenue so likely low end of Morris's guidance) and of course the currency hit is straight off the bottom line. With Morris insisting on expanding his raw materials JV he has cut his usualy 3-4 sandbagging down to about 1-2 cents. That puts AXTI earnings guidance at significant risk to currency fluctuations which in Q1 will be a sizable. In short, given these known factors, AXTI is very likely to report revenue at the bottom end of the range and will likely miss on earnings.
That leaves only the hope of Q2 guidance for the short term rah rah story (long term you are fine this company produced 80 cents in earnings over a 4 Q stretch and can likely repeat that sometime relatively soon, i.e. within 2-3 years). It is now abundantly clear from Apple as well as Qcom that there is a shortage of a very specific component that is "limiting" smartphone grwoth. Likely Skyworks is the fabber of this component. However, this means that the rest of the components used to make smartphones are becoming much more readily available and even worse potentially stockpiling. In a semi environment that means pricing is deteriorating for those types of components, i.e. pricing pressure on AXTI.
This leaves us with a very weak Q2 and possibly Q3 on the revenue front scenerio. Further, a few more 7-8 cent quarters and you get projectable 30 cent type trailing earnings and at at 15 multiple that means $4.50 is generous.
For AXTI, which is in the Russell 2000 and HEAVILY affected by Russell 2000 ETFs (sorry money talks, BS walks), this posses a signficant risk of a boot from the Russell 2000 by the end of May.
I now predicted a Q1 miss on earnings followed by weak guidance. This will get you another nice move down (see Q3 results, pre and post). The risk is then if the Russell 2000 starts to turn south for the go away in May season that AXTI potentially could get the boot due to its valuation at the end of May. If that happens (actually the best thing for a long term player), index funds will unload AXTI presenting a great opportunity to load up and buy a stock that can produce 80 cents in earnings at a super discounted price.
I think the 52 week low is likely as low as it goes but if the stars align and AXTI's valuation is low enough to get booted form the Russell 2000 (requires sub $4 by 5/31), then $2 is in the cards and on massive flight, maybe even $1. Book value or cash won't matter. My bet is that if it gets the boot load up at $2."
S&P: target price $9- Hold. Moorman at S&P downgrades PCS to a Hold from Buy and new target price of $9 from $15. Seems like PCS' business model is being questioned now.
IMO this is just a bump in the road for PCS. In CC Linquist said the cost of subsidizing the smart phones was about $70M. If you add this to the $0.06 EPS PCS did earn, it equals about $0.28 EPS. Time will tell.
<<full 3G LTE based stations by Q3-12.>>
So there we have it, PCS is quietly upgrading it's old CDMA G2 network to LTE-G3.
IMO this is a huge positive for PCS because Moorman at S&P had been concerned with "congestion" on the old G2 network, which in his latest notes (before todays disappointment) had said he thought PCS had dealt with the "congestion problem." Seems he is right.
This is from the CC transcript, by the way.