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It can be fun to chase merger stocks. I actually made money last year on the Express Scripts-Medco deal, buying Medco when reports arose that the deal would be quashed and cashing out before it actually happened.

But if you're thinking of playing a potential Sprint (NYSE:S) bid for MetroPCS (PCS) that way, don't. Sprint stock tanked on merely a rumor of a bid, then returned to its recent path up. Because, I think, no bid is forthcoming.

Sprint was reportedly interested in PCS in February, when Sprint was trading at closer to $2/share. Now that it's at $5/share, some figure that means a new bid could snag a bargain. But that's based entirely on the idea that the current $5/share price is justified and prepared to go higher still.

I don't buy that.

Sprint rose after it got the iPhone, after it sold the iPhone, and after it started booking higher carriage fees as a result of the iPhone. If you are not part of the Verizon (NYSE:VZ)-AT&T (NYSE:T) duopoly, you're fighting over crumbs. That's what Sprint, Metro PCS, and T-Mobile have in common.

While many analysts think the T-Mobile bid, which has parent Deutsche Telekom putting $1.5 billion into a pot from which it extracts 74% of the resulting company, means the Germans are getting back into the market, I disagree. I think Deutsche Telekom wanted a "currency" it can sell, either quickly through a merger or slowly through its broker. I think it wants out, not in.

In the story linked to above, I also played with rumors that Dish Network (NASDAQ:DISH) might be interested in getting in here, bidding to create a "triple play" of wireless, satellite, and wired broadband for its Blockbuster movies and other video content. That was purely speculative.

Fact is, this is a market with a whole lot of sellers and not many buyers. Sprint's board, seeing what happened on a mere rumor of a bid, may well back away. This would leave Deutsche Telekom free to complete its deal, but it would also leave PCS stock out there for someone like Sprint to grab when the price goes down -- that's going to be the board's attitude.

Meanwhile, investors should be asking how sustainable Sprint's own run-up is. If it can be jolted by a mere rumor, what happens when the iPhone high wears off?

At the end of the day, what I've said before still holds. The only way to sustain a wireless network build-out, with all of its attendant costs, is through monopoly rents. There is no spectrum shortage -- there is, in fact, a glut. And if you're getting into these stocks looking for movements measured in dollars, be prepared to fight over pennies.

Oh, and if you think I'm an idiot because I was wrong about Sprint when it was down, that's fine. Look at me as a contrarian indicator and go ahead and play. That's what makes markets.

Source: Don't Buy The Sprint-PCS Hype