MSI Motorola Solutions Inc

We upgrade our recommendation on NII Holdings Inc. (NIHD) to Neutral based on its current valuation, which plunged by over 58% in the last year. The stock is currently trading at the low end of its 52-week price range. We believe this low level of valuation may provide a cushion for further downslide of the stock price.

Meanwhile, NII Holding’s nightmare continues as the company reported dismal financial results for the fourth-quarter 2011. Both the top line and bottom line were significantly below the Zacks Consensus Estimates.

Management provided a moderate financial outlook for 2012, mainly driven by volatile economic conditions, coupled with depreciation of several Latin American currencies in comparison with U.S. dollars. Moreover, stiff competitive scenarios in various Latin American markets are other near term impediments for the company.

Healthy annual subscriber growth (10,711,900 total digital subscribers at the end of 2011, up 18.7% year over year) has been an endorsement of NII Holdings’ service capability and prospects over the longer time horizon.

The company’s iDEN technology has been in use by Sprint Nextel Corp. (S) in the U.S., which places the company at a partnering advantage. The highly specialized mobile radio network technology combines two-way radio, telephone, text messaging, and data transmission in one network.

Nevertheless, NII Holdings is strapped to a single infrastructure supplier, Motorola Solutions Inc. (MSI). The company confirmed its extended relationship with Motorola Solutions for the supply of iDEN handsets and iDEN network infrastructure through December 31, 2014.

iDEN technology is not as widely used as other wireless networks and has fewer subscribers on a worldwide basis than other digital technology formats. As a result, the company’s competitors, which use GSM or CDMA technology, benefit from economies of scale and lower costs of handsets and infrastructure equipments.

 
MOTOROLA SOLUTN (MSI): Free Stock Analysis Report
 
NII HLDGS-CL B (NIHD): Free Stock Analysis Report
 
SPRINT NEXTEL (S): Free Stock Analysis Report
 
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