Sprint-Nextel Winning Over New Wall St. Bulls

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

HEARD ON THE STREET: Sprint Nextel Has a Bullish Ring

• Summary: Sprint Nextel stock has dropped about 19% since April and 8% YTD due to high subscriber turnover and other factors, but is becoming more attractive to many analysts due to fundamentals. The consolidation of the U.S. wireless business into three main companies (Cingular Wireless and Verizon Wireless are the other two) means costs have been falling faster than subscription rates, and since Sprint Nextel is the only 'pure play' wireless provider among them, it can leverage that savings into its bottom line in a more rapid manner. Additional reasons for bullishness on Sprint Nextel: its large holdings of radio spectrum (important for advanced wireless broadband), impressive revenue growth in the high-single to low-double digit area, and large cash position of $6.6 billion, which could be deployed in share buybacks.
• Comment on related stocks/ETFs: Famed Legg Mason Value Trust Manager Bill Miller is a Sprint Nextel bull -- it's his largest position, and he states that its 'private market value is conservatively 50% above today’s [stock] price'. Dean Bubley comments on how sophisticated feature phones from Nokia and Motorola are challenging wireless providers, but that wifi phones really don't pose such a threat.

Comments

[Brent Jason]

The "ONLY" problem Sprint has right now is network density. Verizon and Cingular both have dense networks due to the fact that they use 800Mhz. And they include their roaming coverage into their maps. Sprint's coverage maps show six different colors making coverage look spotty. If Sprint would include their new Alltel voice and data roaming coverage already, then they would not have any problems adding customers.
Cingular is by far the worst carrier out in the US. They have the lowest JD Power and Customer Reports ratings, but they add customers because of procieved network size.

Sprint is leading in so many ways, but they have to do something about their coverage. Buy Alltel if they need to, but this is the only flaw I see in them.