UBS Warburg and Lehman Bros. lowered full-year estimates for Sprint’s wireline operations, based on first-quarter results (CD April 18 p8) that were below expectations. UBS Warburg analyst Linda Meltzer said firm lowered 2001 earnings per share estimate to $1.30 from $1.55, “assuming continued softness” in 2nd quarter. UBS Warburg continued “buy” rating but fine-tuned price target to $35 from $40. Lehman Bros. lowered 2001 earnings per share estimate to $1.30 from earlier $1.50 and 2nd-quarter forecast to 32 cents from 38 cents. In report by analyst Blake Bath, Lehman adjusted full-year revenue growth forecast to 0.5% from 3.5% “driven almost entirely by a reduction in our full-year data/IP forecast from 24.5% growth to 13.1%.” Investment firm said “most feasible” way for Sprint to penetrate hosting market would be to acquire hosting assets. Lehman Bros. retained “buy” rating as well as $40 price target. Long distance business remains “challenging,” Lehman report said, but Sprint’s “local assets provide valuation support in $20-$23 range” per share, giving Sprint “strong price support.”
Most consumers understand what interactive TV (ITV) is, want it now and would switch from analog cable to digital cable or between cable and satellite services to get it, new study commissioned by 5 ITV technology companies found. Bullish study, conducted by Boyd Consulting for ACTV, Liberty Livewire, Motorola, OpenTV and Universal Electronics, said that more than 2/3 of consumers liked both single-screen TV overlay format of ITV and 2- screen system that uses both TV and PC. Even larger number, 76%, said they liked “personalized” ITV service that relied on handheld touch-screen device to control one-screen viewing. In other findings: (1) Respondents indicated preference for instant access to information, including news, sports and weather (52%), interactive programming guide (44%), behind-scenes information on TV shows (38%), e-mail (37%), games or quizzes (32%). (2) 64% of digital cable and 57% of satellite customers said single-screen overlay TV format would make them more satisfied subscribers. (3) 47% of analog cable subscribers said single-screen ITV service would make them more interested in upgrading to digital cable. (4) 57% of consumers said they would pick whichever digital service (cable or satellite) offered single-screen ITV service with handheld device if they were to trade up. (5) 40% of satellite subscribers said they would switch to digital cable if only cable infrastructure offered single-screen ITV service.
NTIA and FCC released final reports Fri. providing details on challenges to sharing, segmenting or clearing Dept. of Defense- occupied bands and MMDS and ITFS spectrum, setting stage for what some see as need for high-level 3-way talks on possible compromise among FCC, Pentagon and Commerce Dept. DoD evaluation, appendix to NTIA report, said terrestrial military systems couldn’t vacate 1.7 GHz until 2010 and legacy space systems would need access until 2017, dates much later than timelines in federal 3G studies. Still, several industry sources said they were heartened by what they called realistic relocation cost estimates that NTIA provided for 3 options, which range from $2.2 billion to $4.5 billion. NTIA report laid out 3 options for band sharing or segmentation, including recently emerged alternative that involves out-of-band pairing and phased-in migration of incumbents. Despite alternatives, “this does not necessarily mean that the government band is the right choice for 3G,” Naval Rear Adm. Robert Nutwell said at NTIA briefing. He called on wireless industry to make “better case” for 3G spectrum needs.
Spanish-language group owner Entravision said it would put WVEA (Ch. 62) Tampa-St. Petersburg on air today (Fri.) and KPMR (Ch. 38) Santa Barbara Sun. Lilly Gonzalez is gen. mgr. of WVEA and Natalie Quaratino of KPMR.
FCC seeks comment on Qwest application to discontinue telecom facilities in 38 Ariz. exchanges. Qwest said it would transfer 38 exchanges to Citizens Utilities Rural Co. as part of sale between 2 companies. Collectively, 38 exchanges serve 158,000 access lines, with 300 physically located in Utah. Application said planned transfer would have no known effect on service provided in those exchanges. Comments are due April 13.
Teens and younger kids now watch more ad-supported cable programming during prime time than shows from Big 4 broadcast networks, Cable Ad Bureau (CAB) said in its latest analysis of Nielsen Media Research data. CAB study said basic cable networks had averaged 11 prime-time rating and 38 share of teen TV viewers through first 21 weeks of TV season, compared with 10.4 rating and 35.9 share for combination of ABC, CBS, NBC, Fox. Similarly, CAB said, basic cable networks had averaged 10.5 prime-time rating and 44.1 share of kids 2-11, as opposed to 7.2 rating and 30.3 share for 4 major broadcast networks. Both sets of figures were sharp reversals from 8 years ago, when broadcasters still commanded lion’s share of both markets, CAB said.
Minn. Gov. Jesse Ventura (Ind.) picked 3 finalists from 38 applicants to succeed Minn. PUC Comr. Joel Jacobs, whose term expired in Jan. but who has stayed on until successor is picked. Finalists are: Gibbon, Minn., attorney Paul Glaeser, with background in economic development; Eric Malinen, ex-FCC senior legal adviser with background in wireless services and telecom- based business development, and Colin Wightman, engineering dept. chmn. and prof. at Minn. State U., Mankato, with background in energy systems engineering.
Covad shares resumed trading on Nasdaq Tues. and promptly plunged on disclosure of additional financial information, including expected $52 million dive in 2000 revenue. Covad delayed financial announcement last week (CD Feb 20 p4), saying it needed more time to review new SEC-required accounting changes that could materially reduce revenue for last year. Earnings before interest, taxes, depreciation and amortization losses also may increase $17 million, Covad said. DSL provider said “further analysis is required to confirm these estimates.” Covad also said it had: (1) Recorded goodwill and other intangible assets of $120 million linked to acquisition of BlueStar Communications. “The company is currently evaluating whether any portion of goodwill or intangible assets are impaired,” Covad said. It hasn’t yet assessed magnitude of any write-down. (2) Listed $50-$200 million in restructured charges and tangible asset impairment charges for 2000 and 2001 in previously announced cost-cutting efforts. Timing and magnitude of charges still was being gauged. (3) Marketing development funds provided to help customers with marketing efforts and recorded as 2000 expenses are estimated to be $38 million. Covad was reviewing quarter-to-quarter timing of classification of those payments as expenses or revenue offsets “and any additional commitments made but yet to be recorded.” Covad said it had begun to review of internal procedures used to implement service contracts and bill customers. In last few months, several CLECs and IXCs have noted in financial disclosures that their revenue reports were being affected by cash-strapped ISPs that couldn’t pay their bills. To ensure correct recognition of revenue, Covad is reviewing ISP contracts, billings, marketing development funds. Efforts to prepare financial statements in line with SEC-required accounting rule change are expected to take several weeks. Until then, company said it couldn’t provide guidance on expected impact of statements. Nasdaq had halted trading of Covad shares Fri., saying they wouldn’t resume until “additional information” was received from the company. Covad shares closed down 43.4% on Nasdaq to $1.62.
WorldGate Communications had wider net loss of $14.9 million in 4th quarter despite nearly tripling revenue to $7.5 million. WorldGate, which said net loss excluding one-time expenses actually dropped slightly to $10.7 million from year-ago period, blamed larger overall loss on $4.2 million in acquisition-related charges. Company said it signed up 36,000 interactive TV subscribers in 4th quarter to close year with 104,000. It said it expected to quadruple customer base to 400,000-500,000 by end of 2001 and double annual revenues to $38 million.
DTV channel changes approved by FCC: (1) WQHB-TV Sumter, S.C., can substitute DTV Ch. 39 for Ch. 38. (2) KOTA-TV Rapid City, S.D., can substitute DTV Ch. 2 for Ch. 22. (3) KAUN Sioux Falls, S.D., can substitute DTV Ch. 51 for Ch. 40.