- Sprint is a stock currently priced by the bears.
- The balance sheet gives credibility to this pessimistic sentiment.
- However, something has to give between Sprint and T-Mobile, and when it gives it is likely to be beneficial to shareholders.
Sprint Investors Better Take Notice Of This Chart From T-Mobile
- Many Sprint investors believe the company will be rejuvenated by the addition of lower service prices.
- However, it could have a horrible effect that Sprint's balance sheet is not prepared to absorb.
- A chart from T-Mobile provides a perfect explanation.
- Sprint made some bold moves last year that must pay off in 2015.
- If not, Sprint cash burn will increase, its debt position will rise and its stock will fall further.
- 2015 is an important year for Sprint, and will inform investors whether it'll ultimately recover or go bankrupt.
Update: Sprint Makes Minimal Improvements In Quarterly Subscriber Additions
- Sprint has released preliminary FQ3 subscriber numbers.
- The stock remains a Sell.
- The comparative disappointing subscriber additions continue to enhance the investment thesis that Sprint is not investable until the pricing pressure is resolved or more capital is raised.
Updating My Thesis: I Liked Sprint At $6.28, But Not At $4.34
- Sprint's margin and subscriber developments have been very disappointing.
- Going forward, an increasingly competitive pricing environment is particularly worrisome for Sprint, given the company's already weak margins.
- Shares have gotten cheaper, but I believe that negative developments justify the company's share price collapse.
Sprint And The Severe Market Overreaction, Part II
- In my previous article, I discussed why Sprint is a bargain risk-reward value going forward.
- Due to the outstanding response, I felt I should elaborate on Sprint as a long position.
- Sound management decisions, combined with access to SoftBank's deep pockets for the 600 MHz auction in 2016 are all good signs for the beleaguered telecommunications provider.
- Sprint has become a lotto ticket, and we'll explain why.
- The company is under a mountain of debt and free cash flow generation remains elusive.
- A buyout may be the only way investors get bailed out, but that's not much of an investment case, in our view.
- Sprint (S) has seen its share of tough times over the past several years.
- It will take a while to right the ship, but leadership seems to be on the right track.
- There are hidden gains in the steeply discounted prices that Sprint has recently brought to the market, which may well produce an upswing to current forecasts.
- Sprint recently introduced a new plan to attract customers and give a boost to its declining postpaid subscriber base.
- The carrier has also been lagging rivals Verizon and AT&T in LTE coverage and quality, but claims that most of its network upgrade is complete.
- Our price estimate for Sprint is about $6.50, which is significantly ahead of the current market price.
- Sprint entered the wireless service price wars in August with one of the more aggressive cuts we've seen in telecom.
- If Sprint's plan doesn't work, lower operating margins and revenue will result.
- With Sprint's high debt and unprofitable business, 2015 will be a crucial year, one that could result in significant stock losses.
- Evercore predicts that Sprint will need to raise substantial cash to fund operations and prepare for the 2016 spectrum auction.
- Domestic wireless pricing wars created by Sprint caused the company to lower adjusted EBITDA forecasts by a dramatic amount for the current fiscal year.
- Softbank relationship might help with the capital raise, but it won't reduce any dilutive impact.
Sprint Wisely Moves Forward With Focus On Improving Margins
- Company has opted to offer cheap individual and family plans along with unlimited data plans.
- Also focusing to build strong network with enhanced capacity and coverage.
- Company has managed to reduce its subscriber loss.
Update: Sprint Axes Executive, Hires Goat
- Jeff Hallock is departing, and the "Framily" plan he oversaw was cut.
- Marcelo Claure has cut jobs, cut prices, and changed the marketing strategy.
- Previously, I didn't think Sprint's low price plans were going to drive risk-adjusted returns for the company.
- The departure of the Chief Marketing Officer Jeff Hallock and the end of Framily has changed my position.
- I believe Sprint offers the best value in wireless, but the company did a terrible job of educating consumers. The goat will fix that.
Consistent Strategic Policies Remain Key In Determining Sprint's Long-Term Performance
- Competition in the industry has adversely affected the company’s top and bottom-line numbers in the recent past.
- Top-line numbers and ARPU are likely to remain pressurized due to competitive pricing strategy opted by S.
- Cost cut efforts will positively affect bottom-line numbers in the future.
- Sprint reported a dismal second quarter across the board.
- Q2 EPS was negative $.19, missing estimates by $.13.
- Management cut guidance on EBITDA.
- The stock price was climbing leading up to earnings and then fell sharply from over $6/share to under $5/share.
- I predicted that the new plans weren’t going to provide risk adjusted returns, but I was nowhere near this bearish.
Why A Turnaround Is A Tall Order For Sprint (Video)Leigh Drogen • Nov. 4, 2014
Sprint's Network Strategy Key To Sustainable Growth
- Sprint has embarked on an aggressive price campaign that will stem subscriber losses in the short term, but is limited by tight margins.
- Cost cutting measures have had an impact on investor confidence but will be short-lived.
- The key to Sprint’s success will be a clear network strategy that sells its differentiated 2.5 GHz network.
Sep. 12, 2014, 9:12 AM
Sep. 12, 2014, 7:46 AM
- Impressed with management changes at Sprint (NYSE:S) and seeing the stock as a long-term investment opportunity, Cowen upgrades to Outperform with $8 price target.
- In other news, Sprint plans to offer the new iPhones beginning on Sept. 19 and announces the iPhone for Life Plan, allowing customers to get a new iPhone for $20 per month for 24 months and the guarantee of a new device every two years.
- Shares +2.4% premarket after yesterday's 6.8% gain.
- Previously: Sprint on the move as Claure addresses conference
Sep. 11, 2014, 11:44 AM
- "We're implementing a culture of must-have and nice-to-have," new Sprint (S +5%) CEO Marcello Claure tells the audience (webcast) at the Goldman Communacopia Conference. "We have to focus on must-have and nice-to-have will have to go."
- Everything is on the table, he says, and "some [managers] will make it and some won't."
- The advice he got upon becoming CEO of a public company for the first time was not to change anything for the first 100 days, "but I just couldn't help myself," and Sprint overhauled its offerings on day 4.
- Previously: Claure: Sprint to slash prices, cut more jobs
Sep. 2, 2014, 6:40 AM
- SoftBank (OTCPK:SFTBY) says it will begin selling a humanoid robot named "Pepper", which is equipped with a laser sensor and 12 hours of battery life, at Sprint (NYSE:S) stores in the U.S. by next summer.
- The robot was originally targeted at families and the elderly before getting attention for business use since being unveiled in June.
- SoftBank has developed Pepper with an open platform operating system, allowing customization for use in construction, health care and entertainment industries.
Aug. 21, 2014, 1:31 PM
- Three days after launching new shared data plans (along with big short-term promotions), Sprint (S +1%) has rolled out a $60/month individual plan that provides unlimited data to go with unlimited voice/text. Like the shared data plans, Sprint's offering requires users to forgo smartphone subsidies.
- Sprint notes the individual plan is $20/month cheaper than a comparable T-Mobile (TMUS -1.1%) unlimited plan. For $60/month, T-Mobile offers individuals 3GB of data to go with unlimited voice/text. AT&T and Verizon don't offer unlimited data.
- Meanwhile, in a PR titled "T-Mobile Urges Its Customers to Rescue Sprint Customers," T-Mobile states it will give both a new customer and an existing customer unlimited data for a year, when the latter gets the former to sign up. Those already on unlimited plans will get $10/month in credit for 12 months.
- Sprint lost 181K core platform postpaid subs in Q2, while T-Mobile (aided by aggressive pricing and promotions) posted 908K branded postpaid net adds. Sprint shares are down 23% since reports emerged on Aug. 5 the carrier is abandoning its efforts to acquire T-Mobile.
Aug. 18, 2014, 7:19 PM
- After recently promising big price cuts, Sprint (NYSE:S) has launched Family Share Packs, a pricing scheme that bears a strong resemblance to AT&T and Verizon's subsidy-free shared data plans. Unlike regular Framily plans, there's no drop in per-line charges upon adding new members.
- Sprint argues its pricing sharply undercuts rivals. For example, a family sharing 20GB between four lines would pay $160/month, less than the $210/month charged by AT&T and Verizon for similar plans, and the $180/month charged by T-Mobile (NYSE:TMUS) for a plan featuring 5GB/line for four lines.
- However, Sprint fails to undercut T-Mobile among families requiring less data. With Sprint charging an extra $10/month per line to those buying a bucket smaller than 20GB, an 8GB bucket costs $170/month to a family of four, and a 4GB bucket $140/month. By contrast, a $140/month T-Mobile plan provides 12GB (3GB/line) to a family of four.
- At the same time, Sprint is following T-Mobile's lead in offering aggressive short-term promotions: Until the end of September, the carrier is waiving $15/month access line charges through 2015 for families buying plans with 20GB or larger buckets, and is also throwing in an extra 2GB/line.
Aug. 14, 2014, 6:45 PM
- With a T-Mobile deal off the table, new Sprint (S -1.9%) CEO Marcelo Claure has told employees the carrier will introduce "very disruptive" prices next week. SoftBank's Masayoshi Son suggested last week price cuts were on tap.
- Claure: "We're going to change our plans to make sure they are simple and attractive and make sure every customer in America thinks twice about signing up to a competitor ... When your network is behind, unfortunately you have to compete on value and price."
- The ex-Brightstar CEO admitted (among other things) Sprint's 4G buildout took too long, that social media chatter about the company is mostly negative, and that Sprint didn't react quickly enough to moves from rivals (read: T-Mobile).
- He promises to use Sprint's huge spectrum assets (skewed towards higher frequency bands) to improve network quality, and to have the industry's lowest cost structure. Claure admits the latter will result in new job cuts, but says he isn't sure of their scope.
Aug. 8, 2014, 11:10 AM
- "Price competition will intensify ... Sprint (S -4.4%) will soon be ready to join the fray," says SoftBank's (OTCPK:SFTBF) Masayoshi Son following the end of Sprint's bid to acquire T-Mobile.
- Son notes SoftBank used aggressive pricing and marketing to gain Japanese mobile share following the acquisition of Vodafone's struggling Japanese unit - "We had nothing we could be proud of ... But we were still able to win more net users than anyone else." - and mentions Sprint is testing new service plans (previous).
- T-Mobile, of course, is already quite aggressive with its pricing, and AT&T had made sizable price cuts of its own in response. Verizon is refusing to return fire for now.
- Sprint is now down 23% since reports emerged it's giving up on trying to buy T-Mobile for the time being.
Aug. 6, 2014, 12:45 PM
Aug. 6, 2014, 9:22 AM
- Sprint (NYSE:S) has confirmed reports CEO Dan Hesse is leaving, and will be replaced by Marcelo Claure, founder/CEO of of mobile hardware distributor Brighstar.
- Claure, 43, is already a member of Sprint's board. He'll be resigning from Brighstar, and SoftBank (OTCPK:SFTBF) will acquire his remaining interest in the company. Bloomberg states Hesse may receive a $40M+ severance package.
- Shares are off sharply premarket due to widespread reports Sprint is ending its bid (for now) to acquire T-Mobile on account of regulatory opposition, as investors fear the carrier will continue bleeding share to T-Mobile, Verizon, and AT&T as an independent entity.
- More on Sprint/T-Mobile
Aug. 6, 2014, 9:14 AM
Aug. 5, 2014, 7:14 PM
- Bloomberg joins the WSJ in reporting Sprint (NYSE:S) is abandoning its T-Mobile USA bid. The news service adds Sprint plans to name a new CEO as soon as tomorrow.
- Dan Hesse has been Sprint's CEO since 2007. But with a T-Mobile deal apparently off the table and Sprint continuing to lose share to rivals, SoftBank's (OTCPK:SFTBF) Masayoshi Son may feel new leadership is needed.
- S -4.5% AH
- Update: Re/code reports Marcelo Claure, founder of mobile hardware distributor Brightstar, will be named Sprint's CEO. Shares finished AH trading down 15.1% on the T-Mobile news.
Aug. 5, 2014, 6:58 PM
- The WSJ reports Sprint (NYSE:S) is abandoning its bid to acquire T-Mobile USA (NYSE:TMUS) due to excessive regulatory hurdles.
- There were already many doubts about the ability of a Sprint/T-Mobile deal to pass muster with regulators.
- If Sprint is out of the picture, the coast is clear for Iliad (OTC:ILIAF) to pursue T-Mobile, provided financing isn't an issue. There were multiple reports earlier today indicating T-Mobile is rejecting Iliad's initial $33/share offer for a 56.6% stake.
- TMUS -5.6% AH
- Related tickers: OTCQX:DTEGY, OTCPK:SFTBF
Aug. 5, 2014, 3:59 PM
- The WSJ reports T-Mobile USA (TMUS +0.8%) has rejected Iliad's (OTC:ILIAF) request for access to its books, and won't change its mind in the absence of a better bid. The FT reports a formal rejection of Iliad's $33/share offer for a 56.6% stake in T-Mobile could arrive tomorrow.
- As it is, Deutsche Telekom (OTCQX:DTEGY) was reported to have liked Sprint's (S -1.4%) offer better. Sprint and parent SoftBank (OTCPK:SFTBF) are rumored to be offering ~$40/share, but their bid also carries much more regulatory risk.
- Reuters reports Iliad is talking with investors for help in sweetening its offer. Sources state the carrier has engaged pay-TV providers Dish , Cox, and Charter, as well as infrastructure, pension, and sovereign wealth funds.
- The news service adds DT is (not surprisingly) skeptical about Iliad's claim a merger between a French carrier and a U.S. carrier will yield $10B in synergies.
Aug. 1, 2014, 4:20 PM
- "If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition," says the FCC in a blog post. The post outlines a proposal by chairman Tom Wheeler that bars carriers from jointly bidding in next year's huge low-frequency spectrum auctions.
- The WSJ reported two weeks ago Sprint (S +1.4%) and T-Mobile (TMUS +1.4%), each of whom have a dearth of low-frequency spectrum relative to AT&T and Verizon, plan to form a JV that would raise $10B to jointly bid in the auction. The funds would be obtained through a $45B financing package SoftBank is lining up for a Sprint/T-Mobile merger.
- "It’s certainly a hint that they are predisposed against a merger," says analyst Craig Moffett about the FCC's stance. Prospective T-Mobile acquirer Iliad (OTC:ILIAF) must be pleased.
Aug. 1, 2014, 4:08 AM| 5 Comments
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