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Dear Mr. Berko:

Dear D.F.:

MetroPCS Communications Inc. (PCS-$12.40) is one of the many small wireless communications carriers competing against Verizon, AT&T, Sprint, T-Mobile, Alltel and other big carriers. MetroPCS went public in April 2007 with the help of Bear Stearns, selling 50 million shares at $23. Revenues in 2007 were $2.2 billion, should grow to $2.8 billion in 2008 and might hit $3.4 billion in 2009. The company earned 57 cents per share in 2007, expects to earn 58 cents in 2008 and, if the economy doesn’t get any worse, Wall Street thinks MetroPCS could earn 70 cents in 2009.

This upstart has had a good start. But a couple of industry analysts seem to think that MetroPCS’s revenue growth will hit a wall. They also tell me that MetroPCS’s 71-year-old co-founder, chairman, chief executive officer and president, Roger Linquist, is not a nice guy. He thinks he walks on water, and the troops tell me he’s very stiff and aloof.

Though MetroPCS’s financials are quite good, the company defines “customer service” as an oxymoron. Its management reminds me of Gary Forsee, the chairman and CEO who ran Sprint Nextel Corp. into the ground. MetroPCS might move higher to the $17 to $19 level. But that would only be market momentum, not management-driven. Stay away from MetroPCS.

Verizon Communications Inc. (VZ-$29.95) expects to post $100 billion in 2008 revenues. It was born in 2000 via the merger of Bell Atlantic and GTE and now has 141 million land lines and 60 million wireless customers, and is the largest provider of print and online directory information. It seems that VZ has a hearty appetite for strategic acquisitions. It bought MCI in late 2006, recently purchased Rural Cellular Corp. and should complete the acquisition of Alltel Corp. before the year’s end, making it the largest provider of wireless services in the United States. I wouldn’t hesitate a Sioux City second to recommend 100 VZ shares rather than 200 shares of PCS. It’s a no-brainer.

VZ’s net profit margins are superior to those of MetroPCS by 10 percent. Return on shareholders’ equity is more than twice that of MetroPCS, cash flow per share is three times larger, and annual revenue per user (ARPU) continues to increase while the ARPU for MetroPCS continues to move lower. Verizon’s $1.84 dividend yields a swell 6.1 percent (PCS has no dividend), management has generated good esprit de corps and VZ’s customer service, while not considered good, is certainly better by miles and miles than that of MetroPCS.

I think Sprint (S-$2.59) is a swell speculation. The ex-CEO, Forsee, ran S into the ground. Now Daniel Hesse, the new CEO, is doing a yeoman’s job of turning Sprint around. He has a hard row to hoe, but I think he can succeed. Go for it.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service