Sprint Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wireless giant Sprint Nextel (NYSE: S  ) slumped more than 11% in intraday trading after a disappointing third-quarter report.

So what: Analysts were looking for a loss of $0.28 per share in Sprint's third quarter, and the company limboed right under that bar with a $911 million, or $0.30 per share, loss. Sprint has been in turnaround mode for some time now as it tries to return to profitability in a brutally competitive marketplace that includes giants such as Verizon (NYSE: VZ  ) and AT&T (NYSE: T  ) as well as smaller upstarts such as MetroPCS (NYSE: PCS  ) . The selling action today may indicate that with the bottom-line miss, investor patience is wearing thin.

Now what: FierceWireless' Phil Goldstein isn't quite as bearish. He thinks the turnaround is getting traction and highlights the fact that net wireless subscriber additions were up significantly and revenue increased for the first time in years. My fellow Fool Tim Beyers has also had some more positive thoughts on the carrier recently, particularly when it comes to Sprint's 4G network. And while the company's bottom line sure looks ugly, investors that peek beyond the income statement will find some pretty impressive cash flow. No doubt the company still has its work cut out for it, but perhaps the situation isn't quite as dire as today's selling suggests.

Interested in more info on Sprint? Add it to your watchlist here by clicking here.

Sprint Nextel is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of AT&T, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.


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  • Report this Comment On October 28, 2010, at 9:38 AM, Matt8265 wrote:

    With a book value of $5.50 per share and a market cap of only 12B (compared to 140B +/-) for T and VZ this is easily a buy out stock. Further, less one time items loss was .18 and the added (called bought) subscribers.

    The largest 4G network on the planet.

    I expect a 1-3 month pop back to 5.00. I bought 10K shares today in real life for 4.25 which appears to be support. Stops are in place just in case but two of the largest holders are GS and Dodge & Cox. These guys seldom make huge mistakes.

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