Earnings Preview: Sprint Nextel

Jul.25.12 | About: Sprint Corporation (S)

Sprint Nextel Corp. (S) is scheduled to report its Q2 2012 results on July 26, 2012, before market opens. The street expects EPS and revenue of ($0.4) loss and $8.73B, respectively.

In this article I will recap the historical results of the company, its latest EPS estimates vs. surprises, the latest news from S and the news from its closest competitors.

Sprint Nextel Corp. Revenue and Net Income History

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last three quarters. In the last quarter it reported ($0.29) loss per share, beating analyst estimates of ($0.41) loss.

Sprint Nextel Corp. EPS Historical Results vs Estimates

The consensus EPS estimate is ($0.4) loss based on 32 analysts' estimates, down from ($0.28) loss a year ago. Revenue estimates are $8.73B, up from $8.31B a year ago. The median target price by analysts for the stock is $3.00.

Average recommendation: Hold

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On March 26, 2012, Canaccord Genuity initiated Hold rating for the company.

Latest News

  • On June 19, 2012, Reuters reported that Sprint Nextel Corporation has entered into a $19 million settlement to resolve a lawsuit by U.S. customers who accused the money-losing mobile service provider of improperly charging them for using their cell phones to send pictures.
  • On June 19, 2012, Birdstep Technology ASA announced that Sprint has selected its EasySmart client to provide intelligent data traffic management for Wi-Fi and WiMAX.
  • On May 29, 2012, Sprint Nextel Corporation announced that it has entered into a new $1 billion credit facility with Deutsche Bank and a syndicate of other banks to finance equipment purchases from Ericsson for Network Vision.
  • On May 4, 2012, Former United States Securities and Exchange Commission attorney Willie Briscoe, founder of The Briscoe Law Firm, PLLC, and the securities litigation firm of Powers Taylor, LLP announced that the firms are investigating legal claims against the officers and Board of Directors of Sprint Nextel Corporation ("Sprint") for possible breaches of fiduciary duties and other violations of state and federal law relating to a complaint issued by the New York Attorney General seeking over $300 million in damages.
  • On April 26, 2012, Glancy Binkow & Goldberg LLP announced that it is investigating potential claims on behalf of the shareholders of Sprint Nextel Corporation ("Sprint" or the "Company") concerning possible breaches of fiduciary duties by the Company or its fiduciaries.
  • On April 21, 2012, Faruqi & Faruqi, LLP, a national securities law firm, announced that is investigating potential securities fraud at Sprint Nextel Corporation. The investigation focuses on whether Sprint and its executives violated federal securities laws by failing to disclose that Sprint knowingly evaded New York state taxes.
  • On April 19, 2012, Reuters reported that the state of New York sued Sprint Nextel Corporation for more than $300 million, accusing the Company of tax fraud by deliberately not collecting or paying millions of dollars of taxes for its cell phone service.
  • On March 1, 2012, Sprint Nextel Corporation announced the closing of its previously announced offering of $1 billion aggregate principal amount of 9.125% Notes due 2017 (the 2017 Notes) and $1 billion aggregate principal amount of 7% Guaranteed Notes due 2020 (the 2020 Notes and, together with the 2017 Notes, the Notes).
  • On February 28, 2012, Sprint Nextel Corporation announced that it has priced its previously announced offering of $1.0 billion aggregate principal amount of 9.125% Notes due 2017 (the "2017 Notes") and $1.0 billion aggregate principal amount of 7.0% Guaranteed Notes due 2020 (the "2020 Notes" and, together with the 2017 Notes, the Notes).
  • On February 7, 2012, Sprint Nextel Corporation announced that it is partnering with Orange Business Services to provide Sprint with global machine-to-machine (M2M) connectivity outside the U.S. Through this agreement, Sprint will expand its M2M reach to include Sprint-branded global M2M connectivity to 180 countries.

Competitors

CenturyLink (CTL), Level 3 Communications (LVLT), AT&T (T), and Verizon Communications (VZ) are competitors for Sprint Nextel and the table below provides the key metrics for these companies and the industry.

Sprint Nextel Corp. key ratio comparison with direct competitors

The chart below compares the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

S ChartClick to enlarge
(Click to enlarge)

S data by YCharts

Competitors' Latest Developments

  • On July 18, 2012, Level 3 Communications, Inc. announced that ESPN Brazil will use Level 3 Vyvx broadcast solutions infrastructure and managed services to optimize transmissions and provide integrated services for TV stations that carry its broadcasts in Brazil.
  • On July 16, 2012, Digital Realty Trust Inc and CenturyLink, Inc.'s Savvis Inc announced the completion of the joint venture acquisition of a 164,000-square-foot (15,236-square-meter) facility in Hong Kong.
  • On July 13, 2012, AT&T Inc announced that it has reached an agreement with the International Brotherhood of Electrical Workers on a one-year contract extension covering nearly 7,000 core wireline employees.
  • On July 5, 2012, Verizon Communications Inc. announced that Hydro and Verizon have entered into an agreement under which Verizon will deliver a managed global wide area network with integrated security and remote access solutions, an integrated partner firewall to enable third-party access to select business solutions and full professional service support.
  • On June 27, 2012, Level 3 Communications, Inc. announced that TVRL GmbH & Co. KG, which operates the music TV service Putpat, has selected Level 3 to support the company's growing need for high storage and availability requirements for various delivery formats, while ensuring rigorous content security and workflow optimization.
  • On June 26, 2012, Level 3 Communications, Inc. announced that it has been selected by ScaleMatrix, to provide secure, reliable connectivity between two of its primary data center facilities in San Diego, Calif., and Katy, Texas.
  • On June 21, 2012, CenturyLink, Inc. announced that it has won a contract renewal worth $2.1 million over the next five years to provide telecommunications services to the U.S. Army base at Fort Stewart, Ga. The contract is for one year with four one-year options.
  • On June 15, 2012, CenturyLink, Inc. announced that its wholly-owned subsidiary, Qwest Corporation, agreed to sell $400 million aggregate principal amount of 7.00% Notes due 2052.
  • On June 14, 2012, CenturyLink, Inc. announced that it has won a $233 million task order to provide primary managed data networking services over the next five years to the Social Security Administration (SSA) under the Networx Universal contract.
  • On June 13, 2012, Savvis, a CenturyLink company announced a strategic agreement with Hortonworks enabling Savvis to leverage Hadoop to offer cloud-based big data solutions for enterprises.
  • On June 7, 2012, Verizon Communications Inc. announced that its Board of Directors declared a quarterly dividend of $0.50 per outstanding share, unchanged from the previous quarter.
  • On June 4, 2012, Reuters reported that Verizon Communications Inc., is looking to cut its workforce by 1,700 people, or almost 1%, through a buyout offer for technicians and call-center employees.
  • On June 1, 2012, Verizon Communications Inc. announced a definitive merger agreement under which Verizon will acquire Hughes Telematics, Inc. (HTI) for $12.00 per share in cash, or a total of $612 million.
  • On May 15, 2012, AT&T Inc's AT&T Government Solutions announced that it has been selected as a prime vendor under the Tactical Communications Equipment and Services (TacCom) contract.
  • On May 15, 2012, Level 3 Communications, Inc. announced multiyear contract with European-based content provider Voxility. Under the terms of the agreement, Level 3 will provide more than 250 Gbps to Voxility's three datacenters, located in North America and Europe, providing a substantial amount of capacity to support the company's continued global growth.
  • On May 11, 2012, Reuters reported that AT&T Inc has held talks to buy Leap Wireless International, Inc. in recent months. These talks were serious enough for Leap Wireless to hire bankers to advise it on a potential deal.
  • On May 9, 2012, CenturyLink, Inc. announced that for the second quarter 2012 it expects, Operating Revenue to be in the range of $4.55 billion to $4.60 billion and adjusted diluted EPS to be $0.59 - $0.64. For fiscal 2012, it expects operating revenue to be in the range of $18.2 billion to $18.4 billion, adjusted diluted earnings per share (EPS) to be $2.35 - $2.55. According to I/B/E/S Estimates, analysts on an average were expecting the Company to report revenues of $4.58 billion and EPS of $0.59 for the second quarter of 2012; revenues of $18.3 billion and EPS of $2.38 for fiscal 2012.
  • On May 7, 2012, CenturyLink, Inc.'s Savvis announced that FXall has renewed its hosting and infrastructure services agreement with Savvis and will take additional data center space to accommodate client demand and ongoing market growth.
  • On May 3, 2012, Level 3 Communications, Inc. reiterated fiscal 2012 guidance provided in fourth quarter 2011 call and expects 20% to 25% Adjusted EBITDA growth from the starting point of $1.216 billion of pro forma Adjusted EBITDA for 2011.

Technical Overview


The stock has a market capitalization of $10.98B and is currently trading at $3.66 with a 52 week range of $2.10 - $5.27. The stock's year-to-date performance has been 56.41%. It is currently trading above 20, 50 and 200 SMA.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.