"The stock is down because people are concerned that marketing costs went up during the quarter," on campaigns including its sponsorship of NASCAR auto racing, said Patrick Comack, an analyst with Guzman & Co. But that money is well spent, he said, and is helping Nextel continue to post big gains.
Nextel had a very busy quarter.
Earlier this month, it won a fierce regulatory battle and gained approval to take over valuable airwaves that are critical to its future. Those airwaves will enable the company to carry more calls and more high-speed data traffic.
During the conference call, Nextel executives said they would have to review the details of the $4.8 billion package that the Federal Communications Commission approved before deciding to accept the deal. But in discussing the FCC action, Donahue said, "We applaud their decision."
The company's expenses increased, in part to fund its current, yearlong trial of a new high-speed Internet service in Raleigh, N.C. It expanded Boost Mobile, its service targeting the youth market, to seven new cities, including the Washington area.
It also launched new services including an international walkie-talkie service that allows people to communicate, with the push of a button, between Canada, the United States and four countries in South America. In addition, the company reduced its debt by $700 million during the quarter, to $9.6 billion.
Among other wireless providers, Sprint's wireless division reported revenue of $3.6 billion, up from $3.1 billion during the corresponding period a year ago. The company does not break out that division's profit; the company overall posted earnings of $233 million, up from $7 million a year ago as gains in its wireless division helped offset declines in Sprint's long-distance business.
Cingular had revenue of $4.16 billion, up from $3.87 billion. The company does not report net income, which is incorporated into its parent companies' financials. SBC will announce its second-quarter results today; BellSouth will release its results on Monday.
AT&T Wireless's profit dropped to $61 million (2 cents) from $222 million (8 cents). The company's revenue increased slightly, to $4.22 billion from $4.16 billion. In February, AT&T Wireless agreed to merge with Cingular, based in Atlanta, in a deal that could close later this year.