by Christian Deuber
Sprint Nextel (S) is currently trading close to its 52-week low of $2.10, yet the company currently ranked No. 3 in Newsweek's 2011 list of greenest companies sees a sustainable future. Will the Street ever be able to see long-term value in Sprint Nextel's good intentions? Let's look at all the current variables in play.
It's part of an ongoing battle that's been waged for years. It's hippies vs. geeks. Can an eco-friendly product compete with other technologically advanced options? We will soon find out as Sprint Nextel unleashes a new mobile phone touting the most eco-friendly features the market has ever seen.
The new LG Optimus Elite will be available on Earth Day, April 22, exclusively through Sprint Nextel's website and with retail availability starting on May 18. The new phone marks the third device launched by Sprint Nextel and LG this year that boasts eco-friendly attributes and the coveted UL Environment Platinum Certification -- the highest level of environmental performance. Beyond the actual hardware, the Sprint Nextel version comes in fully recyclable packaging that is printed with soy inks, contains up to 87% post-consumer paper and was engineered with a glueless construction. The question is: Does anybody really care?
If going green with technology is not your thing and you'd rather just plant a tree on Earth Day, don't worry, Sprint Nextel has a new phone for you too. This week the Galaxy Nexus, a Google (GOOG) branded smartphone, will make its debut on Sprint Nextel. The new device, running on the Android 4.0 operating system, will be available on April 22 for $199.99. Interestingly enough, this price is $100 cheaper than an identical phone being offered through Verizon (VZ).
The Galaxy Nexus, manufactured by Samsung, includes a pretty standard list of features including a 4.65-inch screen, front-facing and 5-megapixel rear-facing cameras, and 1080p-HD video recording. On the not-so-standard front, the phone offers a very innovative way to unlock your phone with your face. This device begins to tap into new facial recognition technology that users have been clamoring for.
Another innovative feature of the Galaxy Nexus is the ability to support Google Wallet, which turns the device into a virtual credit card. While this is not the first phone to offer Google Wallet, new incentives are being offered in order to entice users to sign up for this futuristic payment system. Sprint Nextel customers who start a Google Wallet account within a week of activating their phone will receive a $10 instant credit and an additional $40 credit within three weeks.
Imagine this scenario: Unlock your phone with your face by staring into the lens, pay for your morning coffee with a simple wave of your phone, and grin from ear to ear as you pull up the "S" ticker on Yahoo Finance … uh-oh.
Sprint Nextel is cranking out new products and incentives with partners all over the globe, yet the stock has yet to be re-energized. Over the past 52 weeks of trading, Sprint Nextel is down almost 50%. Over the same period, Apple (AAPL) stock has rocketed into the stratosphere with sales results to back up the run.
Investors are not asking Sprint Nextel to keep pace with Apple, or even Google for that matter, but they are asking the company to show a little spring in its step. And by investors, I am primarily talking about the 86.4% institutional ownership. One of the primary issues holding Sprint Nextel down at the moment could be the heavy debt load. The debt-to-equity ratio for Sprint Nextel is 1.77. In simple terms, the company requires $1.77 in borrowing to produce each $1 in asset value. As you probably can guess, neither Google nor Apple is carrying any debt while protecting their treasure chests full of cash.
Can a few new product offerings and some much-needed Earth Day love for Sprint Nextel's green initiatives pop this sluggish stock? Maybe. For starters, the company needs to navigate the stormy waters of some recent patent infringement lawsuits being waged by Cox Communications. If the company can fend off the legal suits and spark some fresh interest in the new Google phone, there might be a little hope.
The mean analyst target price for Sprint Nextel over the next year is $3.79. With a current price of $2.50, this stock could muster a respectable run built on the back of green marketing, low-cost plans to steal customers from AT&T (T), fresh products, and expanded 4G LTE coverage coming soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.