Earnings Preview: Sprint Nextel Corporation

Sprint Nextel Corporation (S) is expected to report Q2 earnings before market open Wednesday, August 6, with a conference call scheduled for 11:00 a.m. ET.

Guidance

Analysts are looking for EPS of 3c on revenue of $9.17B. The consensus range is (3c) to 8c for EPS, and $8.98B to $9.4B for revenue, according to First Call. The company reported strong Q1 results, beating analysts estimates for EPS and revenue. Sprint Nextel also stated it sees improved post-paid customer churn rate in Q2, and net post-paid subscriber losses improving marginally vs. Q1. There were rumors during the quarter that Sprint Nextel and South Korea's SK Telecom (SKM) were discussing joining together to develop new phones and services. The majority opinion was SK Telecom would take a minority position in Sprint, but there wouldn't be a merger.

Analyst Views

JP Morgan stated on July 16, it viewed the potential deal as unlikely. The firm didn't believe there was a strong likelihood of a combination given the continued operational challenges at Sprint. Further, the firm believed private equity would be hesitant to take part in another telecom deal given the recent Alltel/Verizon deal. The firm did, however, maintain a Neutral rating on the company's shares.

Comments

[Nextel Acce...:]

Go Sprint!!

2008 Aug 05 12:22 PM

[Sprint Obse...:]

Sure hope Dan has some good news for all of us!!!

2008 Aug 05 12:42 PM

[SalC:]

The stock is up today, so I'm guessing most of the prophets are predicting he will.

2008 Aug 05 02:42 PM

[Winger:]

They should have a good report... Sprint has not spent any capital money to improve their network in the last 8 months. There are sites currently down that they will not repair.

2008 Aug 05 06:22 PM

[Indian Joe:]

How! Smoke signals!

2008 Aug 06 08:57 AM

[Equity4all:]

Don't get your hopes up. If history is any guide, they return 4% on equity so, that should translate into $0.2/share in a good year. If I give them a PE of 20 (which I wouldn't since they haven't demonstrated that they can grow with the big boys) that would give them a share price of $4. But, since they have been shrinking rather than growing the top and bottom lines, I would give them a much lower PE ratio which of course would further depress the stock price.

As Cramer aptly stated the other night; stocks that sell for less than $10 can cost you big time, and they are selling for less than $10 for a reason. A $1 move on a $10 stock is a 10% move. As the price declines, subsequent decrements are magnified in percentage terms.
Most of the time 'fallen Angels' such as S are there due to poor management, culture clashes and poor execution in all functional areas. A good example of that would be Lucent before its merger with Alcatel and Alcatel Lucent after the merger. Mergers don't save bad companies.

Another thing to look at is their debt to equity ratio and how many times they cover interest payments. Their bonds are rated junk. Therefore, I might take a stab at their bonds, but certainly not their stock.

I am sure that many of you are S employees trying to hype the company and move the stock price in a northerly direction. My advice would be to go out and win new customers while taking care of your existing one's and stay off of these message boards. Let your actions and the financial fundamentals do your talking. So far, the results and performance of this company and its stock price is abysmal at best.

My advice, go buy a cd...at least you'll sleep well.

2008 Aug 13 08:08 AM