BUSINESSWEEK ONLINE : APRIL 10, 2000 ISSUE
INFORMATION TECHNOLOGY Nextel: The Happy Loner Can it stay that way with such a tempting stock price? Bernard J. Ebbers, the chief executive of long-distance giant MCI WorldCom Inc. (WCOM), has earned a reputation for making shrewd acquisitions over the past decade. But he missed a doozy last year. In May, Ebbers balked at acquiring wireless player Nextel Communications Inc. (NXTL) for about $13 billion. Since then Nextel's shares have more than quadrupled, to 151, thanks to booming demand for its wireless phone services and focus on the lucrative business market. That makes Nextel worth a staggering $55 billion today. With that performance, the question is: Can Nextel remain independent in a rapidly consolidating telecom market? In an industry where Ebbers is acquiring Sprint (FON) and where Bell Atlantic (BEL) is teaming up with GTE (GTE), Nextel (NXTL) looks increasingly like a target for the giants. Potential bidders could include Deutsche Telekom or BellSouth Corp. (BLS). But Timothy M. Donahue, who took over as Nextel's CEO last August, is determined to show that the company can thrive on its own. He plans to introduce a host of new products and services over the next year to keep Nextel's shares soaring. ''At the end of the day, there will be four or five (wireless) players,'' says Donahue. ''We will be one of them.'' Sound ambitious? It is. On Apr. 3, Donahue expects to unveil a mobile phone that globe-trotting executives will be able to use in 65 countries. The $249 phone uses technology to automatically recognize whether to communicate with Nextel's U.S. network or a wireless network in Portugal. To bill for the service, Nextel cut deals with 100 wireless operators worldwide. The phones already are proving popular: France Telecom has ordered 10,000 for its customers. REASONS TO BUY. And that's just a warm-up. Later in April, Donahue will roll out a collection of Internet services called Nextel Online. Like similar offerings from Sprint, it will let users look up sports scores or stock prices. But the big draw will be specialized applications for Nextel's 4.9 million business customers. For example, eDispatch.com will let construction contractors tap into their corporate Web site via a phone to check out whether enough two-by-fours have been delivered to a building site. ''Offering applications that enhance productivity gives users a reason to buy,'' says analyst David A. Freedman of Bear Stearns & Co. Donahue expects the service to bring in an additional $7 to $10 a month for every data subscriber. Not that it's time to start counting that money just yet. The reason: The only company that makes wireless equipment for Nextel's network is Motorola Inc. (MOT), which has a spotty track record in data products. While Nextel rivals such as AT&T (T) and Sprint (FON) will be able to go to many equipment vendors, Nextel will be dependent on Motorola keeping up with the latest technology. Donahue downplays the risk and says ''Motorola has been a good partner.'' That's not the only challenge Donahue has to overcome. Nextel plans to plunge into the competitive consumer market next year. That would let Nextel better use its network on nights and weekends. But the margins are slim, and Donahue will have to forge new ties with consumer-electronics retailers. Can Donahue keep Nextel on a tear? Analysts like his chances. Charles A. DiSanza, an analyst at Gerard Klauer Mattison Co., predicts that Nextel's stock will climb to $200 a share a year from now. Whether that will be enough to fend off potential acquirers remains to be seen. What's certain is that anyone who makes a run at Nextel now will have to pony up far more than the amount that gave Bernie Ebbers pause. By Amy Borrus in Reston, Va. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Nextel: The Happy Loner TABLE: What's Next for Nextel ONLINE ORIGINAL: Nextel Isn't "Next Who?" Anymore INTERACT E-Mail to Business Week Online

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