Nextel COO to leave company

Nextel Communications announced that James Mooney, the company’s COO, is leaving at the end of the month.

Nextel shares were down $1.05, or 12.65%, to $7.25, in late afternoon trading as the news spooked investors. Analysts consider Nextel the strongest wireless operating company in the industry today, and Mooney played a large role in helping Nextel grab a profitable market share during a year characterized by a sharp economic downturn.

“This is questionable timing since Nextel is really performing well,” said Phil Redman, research director with Gartner Group. “He was a strong leader while he was there and expectations will now be set even higher for a replacement.”

Nextel President and CEO Tim Donahue will assume the role of COO until the company finds a replacement. Mooney has been COO at Nextel since April 2001, replacing Donahue, who was promoted to CEO. Donahue previously served as COO from 1996 to 1999.

“We believe the departure of Mr. Mooney is clearly a negative for Nextel and the stock will likely react to the downside,” wrote Craig Mallitz, vice president with Legg Mason, in a research note. “However, we also believe that the company’s competitive advantage is its differentiated product, which is not affected by this management change.”

Legg Mason reiterated its “buy” rating on Nextel stock. Nextel’s ability to offer an integrated two-way radio and mobile phone has attracted a number of loyal enterprises and work groups. The company has said it is on track to add 2 million customers for the year, relatively the same amount it added last year.