A Sprint In My Step

| About: Sprint Corporation (S)

Now this is impressive.

Sprint Nextel Corporation (NYSE:S) reported a 46 cent loss (~40-41 was expected), which most people would have thought would send the shares down hard. Instead they're up almost 20% premarket.

Why?

First, the wider loss was all on write-downs (most attributable to Nextel, I suspect.) That's a line of business being discontinued.

Second, while Nextel lost a lot of customers, the "Sprint" side gained 442,000 postpaid customers. Churn fell to 1.69% from 1.72%. Revenue was up 6%, well above last year's comparable quarter's increase. And ARPU was up too, which is one of the key metrics for a mobile phone company. And finally, the company guided OIBDA up materially, to $4.5-4.6 billion from a previous range of $3.7-3.9 billion.

Pre-market the stock was bumping up against the $4 price level. We'll see what happens during the trading day, but this is an impressive showing. The company's execution is moving in the direction it should be, and the stock price is responding accordingly.

Technically, assuming price can break through $3.75 and hold it on the daily I am still looking for the bottom of the gap at $4.50 as a "first stop," and if we work our way up there my analysis on the technicals -- including volumetrics -- shows that there could be a very rapid rise in share price to around $6.

Needless to say if you got involved in the low $2s when I started banging the table on this turnaround story that will be a massive home run.

The only fly in the ointment is that if the stock opens here ($3.85, approximately) it will leave a nasty little gap that, on any sort of material disappointment later on, could serve as a price magnet. As such this, like so many of these stories, is a "you either got it when the getting was good or you're taking a hell of a lot of risk trying to chase it" deal at the present time.

Disclosure: Long and liking it.