Thursday, September 24, 1998

Price Communications Co.
(AMEX: PR)
Phone: 212-757-5600
Price (8/23/98): $7 15/16

HOW DID IT DOUBLE?

Price Communications turned off the TV and turned on the 21st century. Two years ago the company sold off all of its television stations and piled the proceeds into the golden age of wireless communication.

With the October 1997 merger with Palmer Wireless in place, the company was set to cash in. Weakness at cellular equipment bellwether Motorola (NYSE: MOT) and the eventual Asian flu had set off a fundamental explosion where many of the key players in wireless were sent scrambling for shelter. But not Price. It stuck to its knitting and grew.

The Price was right, and shareholders came on down to see the shares go on up.

BUSINESS DESCRIPTION

The new and improved Price Communications provides wireless telecommunication services under the national Cellular One name in 16 FCC licensed areas in Florida, Alabama, Georgia, and South Carolina. That covers an estimated population of 3.3 million with over 347,000 subscribers as of the end of June.

Despite the Southeastern territory, the company is headquartered in New York City. The Price in Price Communications comes from Robert Price, the company's President, CEO, and Treasurer.

FINANCIAL FACTS

Income Statement
12-month sales: $135.9 million
12-month income: ($23.6 million)*
12-month EPS: ($0.72)*
Profit Margin: N/A
Market Cap: $173.8 million
*Includes non-recurring items

Balance Sheet
Cash: $111.8 million
Current Assets: $163.8 million
Current Liabilities: $48.6 million
Long-term Debt: $786 million

Ratios
Price-to-earnings: N/A
Price-to-sales: 1.3

HOW COULD YOU HAVE FOUND THIS DOUBLE?

Price's wireless brand partner, Cellular One, wants cybersurfers to have some fun. At its website, Cellular One has an interactive game where visitors poke around looking for six puzzle pieces. Find them and you win a prize. Here's the seventh puzzler -- how can it be that shares of Price Communications have been so resilient in times when the major players in wireless like Nextel Communications (Nasdaq: NXTL) and cell phone maker Motorola have been slammed to the turf? Solve that and you win this double.

It's wrong to disregard a sector as a whole, even one that is seemingly out of favor. With sympathy breaking up like a poor cellular connection, Price went out bargain hunting. In a series of acquisitions -- $250 million so far and counting -- the company was following the old adage of buying low.

Investors who felt the same way might have found Price to be a savvy salmon, bucking the current. Aggressive at a time when an industry was defensive, looking ahead while others were watching their backs, Price was growing -- and so were the gains of shareholders.

WHERE TO FROM HERE?

Price was a frugal shopper. In May of 1997, it announced that it would buy Palmer Wireless in an all-cash transaction that turned out to be just a little more than one times the book value of Palmer's cellular phone licenses. A week later Commnet Cellular announced that it was being bought by a private concern for four times book value.

Price has lived up to its name. However, as is the case with companies servicing wireless telephone accounts, profitability is not set on speed dial. Price is expected to lose $1.09 a share this year and trim that only slightly to a $0.92 a share deficit next year. This is still a sector that is being valued more on the basis of subscribers than on the near-term income those cellular accounts may provide. Both Price and Wall Street knew this when it shed its consistently profitable television operations two years ago.

Last month, in a gutsy show of confidence, the company announced a stock split that brought the shares back into the high single digits. Iomega (NYSE: IOM) watchers may have a different tale to tell of one stock split too many. But while Price split its shares at a lot lower price than most companies do, who can argue when the price is right -- as long as you don't overbid.

-Rick Aristotle Munarriz
(tmfedible@aol.com)

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