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Why NII Holdings Inc. Shares Got Crushed Today

By Brian D. Pacampara, CFA – Feb 28, 2014 at 2:21PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wireless services specialist NII Holdings (NASDAQ: NIHD) plummeted 52% on Friday after its quarterly results and outlook shocked investors.

So what: The stock has plunged over the past year on deteriorating fundamentals, and today's fourth-quarter results -- loss of $4.33 per share on a revenue drop of 22% -- coupled with downbeat guidance suggest that the downward spiral is only accelerating. In fact, NII reported a whopping net loss of 247,000 subscribers during the quarter, reinforcing doubts over its financial or competitive strength to remain a public going concern.

Now what: Management now sees negative adjusted OIBDA in 2014 due to the significant investments required to reignite growth. "While we are confident that we can improve our business over the long-term, our recent disappointing results have significantly affected our liquidity position," CFO Juan Figuereo cautioned. "We have a much shorter runway to implement our operational turnaround making it even more critical for us to deliver on our business plan for 2014 if we are to be successful." Given the serious risks surrounding NII's survival, conservative Fools would do well to maintain their distance. 

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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