Shares of the provider of wireless communication services fell $24.00 to $119.88 on volume of more than 8 million shares--nearly five times the stock's average daily volume.
The Bellevue, Wash.-based company recently acquired wireless providers including Omnipoint Communications, Aerial Communications and East/West Communications. The accounting of the acquisition costs apparently caused some confusion among investors.
"I think investors sold off some today because of the increased expenses the company took in the fourth quarter from the Omnipoint acquisition," said Frank Marsala, an analyst with Gerard Klauer Mattison.
Excluding the acquisitions, VoiceStream Wireless yesterday reported a net loss of $152 million, or $1.58 a share, for the quarter ended Dec. 31, compared to a loss of $72 million, or 75 cents a share, for the same quarter a year ago. Sales nearly tripled to $164 million from $55.4 million.
Marsala said management would not specify the exact acquisition costs in a conference call, which might have prompted some investors to take advantage of the stock's recent run-up. VoiceStream shares have traded as high as $159.37 and as low as $16.37 in the past 52 weeks.
"My take is that it's right for the company to spend the money now and focus on the Omnipoint acquisition and get it out of the way. That said, I also think the company did not deal with it well. Some investors might have thought, 'Well, if you're not going to talk about (the acquisition costs), then I'll just sell off now,'" Marsala said.
Marsala roughly "guesstimates" the costs ranged from $20 million to $25 million for the quarter.
Wall Street analysts held firm on their evaluation of the company, with none downgrading their rating on VoiceStream today. Kevin Roe of ABN-AMRO raised his 52-week price target to $165, while Hambrecht & Quist analysts Thomas Lee and Johnathan Levine maintained their $230 target.
Among the positive elements of VoiceStream's latest quarter was a gain of 170,000 subscribers, in addition to Omnipoint's 237,000 subscribers.
"They are a relatively new wireless company so it's too early for (analysts) to look at earnings (and) losses," said Marsala. "What's more important is subscriber growth, revenue per subscriber and cost of customer acquisition, all of which were fantastic."
Some analysts note that the upcoming integration of Omnipoint and Aerial will test the company. Lee and Levine noted in their report that "looking at 2000, the key challenge for VoiceStream in our opinion is successfully integrating Ominipoint and Aerial..."
"That will be a huge challenge," said Marsala, noting that the company will have to integrate the call centers, network operation centers and retail efforts of all three companies. "That will be a task because you probably have three companies who are probably doing things in three different ways."