Sprint's Beane Ball

OK, I know this is probably the pettiest of petty things for most people. For me, though, it's the "Slowly I turn, inch by inch ..." kind of incident that just sets me off.

I am referring to a remark made last week by Dan Hesse, the beleaguered CEO of snake-bitten Sprint Nextel (NYSE: S  ) . During the conference call that Sprint hosted to discuss its most recent earnings, Hesse made an unfortunate analogy. He compared Sprint's acquiring the rights from Apple (Nasdaq: AAPL  ) to sell the iPhone, to the actions of a baseball team coveting the next available superstar free agent.

A little background
That iPhone news would have been a shot in the arm for Sprint, except for one thing -- the cost. There was good reason the company had been playing it close to the vest regarding the iPhone's price, because, as my fellow Fool Tim Beyers wrote, "Carrying iCandy will cost $15 billion over the next four years while producing $7 billion to $8 billion in value over the same period. Another mathematically losing proposition ... "

As Ricky Ricardo would say, "Lucy, you got some 'splaining to do."

And here it is...

Hesse: "I recently attended the movie Moneyball with my youngest son, and I couldn't help but be reminded of Sprint's situation. The Oakland A's, think Sprint, for trying to compete and win with a fraction of the financial resources of its deep-pocketed adversaries[;] the Yankees and the Red Sox, think AT&T and Verizon. No one bats an eye [when] one of these high payroll teams signs a superstar. But in Sprint's version of the movie, Dan Hesse, played by Brad Pitt look-alike ... [has] done detailed statistical analyses that a particular player, Isaac Phone, better known as iPhone, versus A-Rod, will not only deliver the runs on the field to win the game but also help draw the crowd and fill the seats in their high-fixed-costs stadium. iPhone has an expensive contract but he's worth every penny."

OK, I can buy the comparison of poor Sprint to the poor Oakland A's, and the comparison of giant telecoms AT&T and Verizon to the wealthy New York Yankees and Boston Red Sox.

But Hesse's thinking is more George Steinbrenner than Billy Beane. Hesse's argument turns the whole premise of Moneyball on its head. The reason that Oakland does not have superstar players is that it can't afford them. Signing those big-number players would cost more money than the Oakland A's have or could ever hope to recoup.

The thesis of Moneyball is that Oakland overcame its financial disadvantage by signing good but overlooked players, ones they could sign cheaply and whose contribution to winning was not measured in dollars but in winning. Moneyball is the story of smarts over money.

Fickle fortune of fandom
Yes, the iPhone is presently the creme de la creme of smartphones in terms of buzz-worthy coolness. If the iPhone was a baseball player, it would be wearing Albert Pujol's number. But do I have to remind people that oftentimes what's cool now can suddenly turn cold.

I'm not going to put Apple in the same category as Research In Motion (Nasdaq: RIMM  ) , but please remember that RIM's BlackBerry was once the most desired (and only) smartphone around. And take Nokia (NYSE: NOK  ) : This former king of cellphone makers is now trying to make a comeback with a new line of smartphones powered by Microsoft's (Nasdaq: MSFT  ) Windows Phone OS.

The biggest threat, though, to iPhone's dominance has to be Google's (Nasdaq: GOOG  ) Android. That mobile operating system powers handsets from Apple's bitter rival Samsung, a company whose total smartphone sales surpassed those of the iPhone in the last quarter.

I'd like to seal Hesse's statement away in a time capsule so that it would pop up in five years or so. Sprint may then wish it had used its resources to modernize its mobile network rather than pour them all into one consumer device whose value lies solely in the hands of the ever-changing taste of the consumer.

Fool contributor Dan Radovsky owns shares of AT&T, but no one will ever mistake him for Brad Pitt. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Microsoft; creating a bull call spread position in Apple; and creating a bull call spread position in Microsoft. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 02, 2011, at 4:57 PM, larrysd1 wrote:

    You take to much to heart amigo,relax. Holding !

  • Report this Comment On November 02, 2011, at 4:58 PM, larrysd1 wrote:

    Motley don't you think it's time to 3 star Sprint ? I do !

  • Report this Comment On November 03, 2011, at 3:44 PM, goose1970 wrote:

    The iPhone representing a low priced player fitting into the Moneyball scheme of the A's is indeed a bad analogy, but in the end, does it really matter? There isn't a need to strive for mediocrity. The A's have won nothing with this strategy. Yes, they've competed, but like wireless carriers, you have to be in it to WIN it. I think the analogy was somewhat entertaining and was forced to fit into Sprint's situation. You shouldn't spend too much time dwelling on it.

  • Report this Comment On November 03, 2011, at 3:50 PM, goose1970 wrote:

    One other thing....the iPhone is a juggernaut like no other we've seen in tech. Arguably the strongest brand we've seen in business in decades, or even history. People have been predicting (even wishing) the demise of the device for a while now, but it keeps chugging along because Apple can come up with innovations such as Siri to operate on the iPhone, thus keeping customers around to refresh their older devices.

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