Sprint Nextel Corp. ($S)
Sprint Nextel Corp. (NYSE: $S)
Sprint Nextel Corp. (S) is a holding company that offers a range of wireless and wireline communications products and services for individual consumers, businesses, government subscribers and resellers. The Company operates in two business segments: Wireless and Wireline. The Company offers wireless and wireline voice and data transmission services to subscribers in all 50 states, Puerto Rico and the U.S. Virgin Islands under the Sprint corporate brand that includes its retail brands consisting of Sprint, Nextel, Boost Mobile, Virgin Mobile and Assurance Wireless on networks that utilize code division multiple access (CDMA), integrated Digital Enhanced Network (iDEN) or Internet protocol (IP) technologies. On November 24, 2009, the Company completed the acquisition of Virgin Mobile USA Inc. On December 4, 2009, the Company completed the acquisition of iPCS Inc.
Sprint was incorporated in 1938 and is headquartered in Overland Park, Kansas.
| Share Statistics (27-April-10) | FY
2008 |
FY
2009 |
%
Chg |
Q4 2008 | Q4 2009 | %
Chg |
||
| Symbol | S | Revenue, $Mn | 35,635 | 32,260 | -9.5% | 8,430 | 7,868 | -6.7% |
| Current price | $4.09 | Gross marg. | 53% | 49.1% | -7.4% | 51.1% | 48.2% | -5.7% |
| 52wk Range: | 2.78-5.94 | Oper. margin | – | -4.33% | – | – | -6.9% | – |
| Avg Vol (3m): | 57,653,800 | Net margin | -7.8% | -7.6% | -2.6% | -19.2% | -12.5% | -34.9% |
| Market Cap. | 12.18B | |||||||
| Shares Outstanding | 3.01B | EPS, $ | -0.44 | -0.74 | 68.2% | -0.13 | -0.29 | 123.1% |
Source: Reuters.com, SEC Filings.
Financial Summary
Sprint this morning announced Q1 revenue of $8.09 billion, in line with Street expectations at $8.05 billion. EPS before special items was in line with the Street at a loss of 17 cents a share. Revenue was down 2% from a year ago; net loss was $865 million, including a $365 million increase in valuation allowance on deferred tax assets generated in the quarter, or $0.29 a share.
The telco noted that it lost 75,000 net subscribers in the quarter, 670,000 fewer than it lost in the year-earlier quarter. Post-paid churn was 2.15%, down from 2.25% a year ago, but up from 2.11% in Q4. Pre-paid churn was 5.74%, down from 6.86% a year ago, but up from 5.56% in Q4.
Sprint said it continues to expect $2 billion in full year capital spending in 2010; the Company expects to generate positive free cash flow for the remainder of the year.
Source: Sprint Nextel Corp.
| Financial Strength (27-April-2010) | Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | 1.17 | 1.73 | 1.47 | 0.75 |
| Current Ratio (MRQ) | 1.27 | 1.91 | 1.61 | 0.90 |
| LT Debt to Equity (MRQ) | 112.15 | 21.50 | 39.03 | 144.49 |
| Total Debt to Equity (MRQ) | 116.39 | 23.94 | 46.06 | 206.92 |
| Interest Coverage (TTM) | -1.75 | 0.00 | 0.17 | 8.80 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
| Buy | Outperform | Hold | Underperform | Sell | No Opinion |
This is the consensus forecast amongst 30 polled investment analysts. Against the Sprint Nextel Corp company.
| Analyst Detail | Buy | Outperform | Hold | Underperform | Sell | No Opinion |
| Latest | 4 | 2 | 20 | 4 | 0 | 0 |
| 4 weeks ago | 2 | 2 | 21 | 4 | 0 | 0 |
| 2 months ago | 2 | 3 | 21 | 4 | 0 | 0 |
| 3 months ago | 2 | 3 | 21 | 4 | 0 | 0 |
| Last year | 2 | 3 | 17 | 1 | 1 | 1 |
Source: www.ft.com
Consensus Estimates Analysis
| # of Estimates | Mean | High | Low | 1 Year Ago | |
| SALES (in millions) | |||||
| Quarter Ending Jun-10 | 18 | 8,001.90 | 8,142.40 | 7,833.00 | 7,965.76 |
| Quarter Ending Sep-10 | 18 | 7,970.63 | 8,164.40 | 7,762.20 | 7,882.29 |
| Year Ending Dec-10 | 25 | 31,652.40 | 33,341.00 | 25,836.00 | 31,276.10 |
| Year Ending Dec-11 | 24 | 31,247.40 | 34,262.00 | 26,559.00 | 30,874.60 |
| EARNINGS (per share) | |||||
| Quarter Ending Jun-10 | 22 | -0.16 | -0.10 | -0.23 | 0.03 |
| Quarter Ending Sep-10 | 22 | -0.17 | -0.10 | -0.24 | 0.03 |
| Year Ending Dec-10 | 27 | -0.65 | -0.19 | -1.00 | -0.16 |
| Year Ending Dec-11 | 26 | -0.52 | -0.15 | -0.99 | 0.01 |
| LT Growth Rate (%) | 6 | 0.47 | 6.00 | -10.00 | 4.67 |
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=S
Investment Highlights
Sprint offers a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. Its operations are organized to meet the needs of its targeted subscriber groups through focused communications solutions that incorporate the capabilities of its wireless and wireline services.
Sprint is the third largest wireless communications company in the United States based on the number of wireless subscribers, one of the largest providers of wireline long distance services and one of the largest carriers of Internet traffic in the nation. The Company’s services are provided through its ownership of extensive wireless networks and a global long distance, Tier 1 Internet backbone.
The Company’s business consists of two reportable segments: Wireless and Wireline
Wireless segment provides wireless mobile voice and data transmission services on networks that utilize CDMA and iDEN technologies, as well as offers fourth generation wireless services. Its wireless data communications services comprise Internet access and messaging, email services, wireless photo and video offerings, and mobile entertainment applications, as well as asset and fleet management, dispatch services, and navigation tools; and wireless voice communications services include basic local and long distance wireless voice services, voicemail, call waiting, three way calling, caller identification, directory assistance, call forwarding, speakerphone, and push-to-talk services, as well as roaming services. This segment sells accessories, such as carrying cases, hands-free devices, batteries, and battery chargers, as well as devices and accessories to agents and other third-party distributors for resale. In addition, it markets its post-paid services under the Sprint and Nextel names; prepaid services under the Boost Mobile, Virgin Mobile and Assurance Wireless names.
Wireline segment provides wireline voice and data communications services, including domestic and international data communications using various protocols, such as multiprotocol label switching technologies, Internet protocol (IP), asynchronous transfer mode, IP-based frame relay, managed network services, voice over IP and traditional voice services. It also offers wide-area network and long distance services, as well as operates an all-digital long distance and Tier 1 IP network.
In 2009, the Company reported that it generated its highest annual free cash flow since the merger.
During the second half of 2009, CEO Dan Hesse stated that the Company’s performance built notable momentum that lead to a fourth quarter with the best sequential and year-over-year improvement in net post-paid subscriber results in the Company’s history, and positive post-paid net subscriber growth for services carrying the ‘Sprint’ brand. Hesse said the Company’s continued focus on clear, simple offers, exciting devices, a better customer experience, dependable network performance, and industry leadership in 4G services is resonating with customers.
According to the Company’s report, Sprint 4G is now available in 27 markets serving more than 30 million people, and is expected to cover up to 120 million people by the end of 2010. For this year, Sprint 4G service is planned for deployment in many additional markets, including the following major metropolitan areas: Boston, Houston, New York, San Francisco and Washington D.C.
Recent Company News
The Company is scheduled to report its first-quarter results today, ahead of the opening bell. Analysts are expecting to see the company post a loss of $0.17, versus a $0.21 loss during the same period last year. In its fourth-quarter conference call, the Company stated that it expects improvement in both postpaid and total subscriber losses in 2010 compared to the last year. In addition, it expects to continue to generate positive free cash flow during 2010. Sprint generated $2.8 million in free cash flow last year, the highest ever in the Company’s history.
Research In Motion (NASDAQ: RIMM) recently unveiled the new BlackBerry Bold 9650, which will be available from Sprint next month. According to the press release, the smartphone will operate on Sprint’s nationwide 3G network domestically, and roams on other high-speed wireless networks around the world for reliable voice and email communication. Fared Adib, S vice president for product development, has said that the BlackBerry Bold 9650 extends the Company’s position of offering the best portfolio of BlackBerry smartphones in the industry with a powerful mobility tool for those who want to stay connected, both domestically and abroad, adding that S customers will appreciate its fast Web browsing, downloads and streaming as well as social media and productivity enhancing applications.
Source: Sprint Nextel Corp.
Technical Analysis
Source: http://stockcharts.com
On Monday, S closed below its 13-day moving average. This is generally considered to be an indication of a bearish trend.
S has been relatively stable recently. This is evidenced by the width of its Bollinger Bands, which are tighter than normal. Additionally, S is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.
S’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9-day moving average or signal line. This suggests that positive momentum has begun to slow.
Comparative Analysis
| Company Name | Ticker | Price per | Mrkt. Cap. | P/E | P/S | ||
| Apr-27-2010 | symbol | Share, $ | $ Mn | 2009 | 2010 | 2009 | 2010 |
| AT&T Inc. | T | 25.95 | 153,340 | n/a | 11.53 | n/a | 1.24 |
| Verizon Communications Inc. | VZ | 28.75 | 81,280 | n/a | 12.55 | n/a | 0.77 |
| MetroPCS Communications Inc. | PCS | 7.56 | 2,670 | n/a | 17.58 | n/a | 0.70 |
| Leap Wireless International Inc. | LEAP | 18.26 | 1,420 | n/a | n/a | n/a | 0.52 |
| Median | n/a | 12.55 | n/a | 0.74 | |||
| Sprint Nextel Corp. | S | 4.09 | 12,180 | n/a | n/a | n/a | 0.38 |
Source: Thomson Financial
Insider Trading Activity
| NET SHARES PURCHASE ACTIVITY
Inside Purchases – Last 6 Months |
||
| Shares | Transaction | |
| Purchases | 6,800 | 2 |
| Sales | 414,869 | 4 |
| Net Shares Purchased (Sold) | (408,569) | 6 |
| Total Insider Shares Held | 4.02M | n/a |
| % Net Shares Purchased (Sold) | (9.2%) | n/a |
| Net Institutional Purchases — Prior Qtr to Latest Qtr | |
| Shares | |
| Net Shares Purchased (Sold) | (180,325,000) |
| % Change in Institutional Shares Held | (7.4%) |
Source: Yahoo Finance
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