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    Stock Alert for Sprint Nextel Corp. (S)

    Sprint Nextel Corp. (S) offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. It served more than 52 million customers at the end of the second quarter of 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The Company operates two reportable segments: Wireless and Wireline.

    Share Statistics (30-Aug-11)

    FY2009 FY2010 % Chg Q22010 Q22011 % Chg
    Symbol S Revenue, $Mn 32.26B 32.56B 0.9% 8.03B 8.31B 3.5%
    Current price $3.59 Gross marg. 49.1% 46.3% -5.7% 47.3% 44.8% -5.3%
    52wk Range: $2.98-$6.45 Oper. margin -1.8% 1.0%
    Avg Vol (3m): 60,926,200 Net margin -7.6% -10.6% 39.5% -9.5% -10.2% 7.4%
    Market Cap. 10.73B
    Shares Outstanding 2.99B EPS, $ -0.65 -1.12 72.3% -0.27 0.28 -203.7%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of S have lost 0.28% in the last five days; 15.37% in the last month; and 8.21% year-to-date.

    Shares of the mobile carrier traded as much as 3.72% higher Tuesday on strong volume of nearly 50 million shares.  Wells Fargo analyst Jennifer Fritzsche yesterday reiterated an Outperform rating on shares of Sprint.

    Following checks at Sprint stores, Fritzsche believes the Company has held up fairly well in the third quarter , with stability relative to larger carriers, Verizon Communications (NYSE: VZ) and AT&T (NYSE: T), improving.

    Barron’s Tech Trader Daily blog reported that the analyst acknowledges that the focus of investors is on the Company’s October 7th investor and analyst briefing, when it is expected the Company will address questions regarding how it will build out its 4G wireless network.

    S recently announced its CEO, Dan Hesse, will deliver the keynote address on November 3, during its 11th annual Open Solutions Conference. The Company said developers will learn about its open enablement strategy, creating applications for 4G and 3D, enterprise machine-to-machine (M2M) solutions, go-to-market strategies, approaches to make developers more profitable, and current Sprint tools and capabilities across devices, networks and platforms throughout the three-day conference.

    S shares have been moving within a range of $2.98 – $6.45 over the past 52-weeks.  The stock is currently trading below its 50-day moving average of $4.18 and below its 200-day moving average of $4.78. Market capitalization currently stands at $10.76 billion and it has 2.99 billion outstanding shares.

    Source:

    http://newsroom.sprint.com/news/

    http://blogs.barrons.com

    Financial Summary

    Sprint reported second quarter consolidated net operating revenues of $8.3 billion, which represented a 4% increase from the comparable quarter last year and remained relatively flat as compared to the first quarter of 2011. The quarterly year-over-year improvement was primarily due to higher postpaid ARPU (average revenue per user), growth in the number of net prepaid subscribers and higher wireless equipment revenues, partially offset by net losses of postpaid subscribers and lower wireline revenues.

    The Company posted an operating income of $79 million and adjusted OIBDA (operating income/(loss) before depreciation and amortization) of $1.3 billion. Additionally, the Company reported a net loss of $847 million and a diluted loss per share of ($0.28) for the quarter, which includes $588 million in equity losses of unconsolidated investments and other ($.20 per share net of tax, which includes the effect of increased valuation allowance of $209 million) and a $52 million charge ($.02 per share, which includes approximately $19 million of related increase in valuation allowance) to tax expense related to recently enacted state law changes in the state of Michigan.

    Capital expenditures, excluding capitalized interest of $102 million, were $640 million in the quarter, compared to $437 million in the second quarter of 2010 and $555 million in the first quarter of 2011. Wireless capital expenditures were $546 million in the second quarter of 2011, compared to $319 million in the second quarter of 2010 and $449 million in the first quarter of 2011. During the quarter, the Company invested primarily in data capacity as a result of increased data usage to maintain a competitive position in data service and overall network quality. Wireline capital expenditures were $35 million in the second quarter of 2011, compared to $49 million in the second quarter of 2010 and $53 million in the first quarter of 2011.

    Sprint generated $267 million of free cash flow in the quarter. As of June 30, 2011, the Company’s total liquidity was $5.2 billion, which consists of $4.3 billion in cash, cash equivalents and short-term investments and $900 million of borrowing capacity available under its revolving bank credit facility. The Company’s next scheduled debt maturities of $2.3 billion are due in March 2012.

    Source: http://newsroom.sprint.com/article_display.cfm?article_id=1990

    Financial Strength (30-Aug-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 0.93 1.39 1.34 0.74
    Current Ratio (MRQ) 1.06 1.49 1.45 1.09
    LT Debt to Equity (MRQ) 122.15 28.17 37.26 113.34
    Total Debt to Equity (MRQ) 139.08 38.27 47.56 154.01
    Interest Coverage (TTM) -0.47 0.02 0.10 22.82

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast among 37 polled investment analysts. Against the Sprint Nextel Corp company.

    Analyst Detail

    Buy

    Outperform

    Hold

    Underperform

    Sell

    No Opinion

    Latest 14 7 12 3 1 0
    4 weeks ago 13 7 10 4 3 0
    2 months ago 12 7 11 4 3 0
    3 months ago 12 7 11 4 3 0
    Last year 6 7 13 5 0 0

    The 30 analysts offering 12-month price targets for S have a median target of 5.50, with a high estimate of 12.60 and a low estimate of 3.00. The median estimate represents a 58.96% increase from the last price of 3.46.

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates

    Mean

    High

    Low

    1 Year Ago

    SALES (in millions)
    Quarter Ending Sep-11 25 8,364.10 8,483.00 8,071.00 8,003.81
    Quarter Ending Dec-11 25 8,461.67 8,676.57 8,088.00 8,033.36
    Year Ending Dec-11 32 33,475.00 33,824.00 32,347.90 32,056.40
    Year Ending Dec-12 32 34,228.10 35,175.00 32,822.20 32,212.20
    EARNINGS (per share)
    Quarter Ending Sep-11 29 -0.21 -0.14 -0.37 -0.14
    Quarter Ending Dec-11 29 -0.22 -0.14 -0.34 -0.14
    Year Ending Dec-11 31 -0.82 -0.46 -1.12 -0.66
    Year Ending Dec-12 32 -0.67 -0.22 -1.39 -0.32
    LT Growth Rate (%) 4 -44.05 6.00 -184.00 1.40

    Technical Analysis

    Source: http://stockcharts.com

    S is within its Bollinger Bands. This is a normal condition suggesting that it is neither overbought nor oversold relative to the recent levels.

    S’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Aug00-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Leap Wireless International Inc. LEAP 9.12 717.71M n/a n/a 0.23 0.22
    MetroPCS Communications Inc. PCS 11.11 4.02B n/a n/a 0.82 0.75
    Verizon Communications Inc. VZ 36.34 102.86B n/a n/a 0.93 0.89
    AT&T Inc. T 29.67 175.82B n/a n/a 1.39 1.38
    Wireless Communications Median       13.07 n/a 1.11 n/a
    Sprint Nextel Corp. S 3.60 10.78B n/a n/a 0.32 0.32

    Source: Thomson Financial

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