Sprint's Silence Is Telling

By Anders Bylund | More Articles
July 29, 2009 | Comments (9)

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You know how Palm (Nasdaq: PALM ) was supposed to save both itself and carrier partner Sprint Nextel (NYSE: S ) with the Palm Pre smartphone? I don't think it's happening, folks. If I were a top executive at Palm, I'd be praying that Verizon (NYSE: VZ ) does a much better job marketing this gizmo than Sprint ever did.

Why am I spewing bile over this partnership today, and over Palm's survival prospects? Because Sprint just reported second-quarter earnings, and the Pre rated barely a blip on the company's radar.

Compare and contrast with me, Fool:

AT&T (NYSE: T ) made a big song and dance out of the launch of the Apple (Nasdaq: AAPL ) 3GS handset. That model alone brought over 800,000 new subscribers to Ma Bell's wireless network, comprising an impressive portion of the 1.4 million net new customers in total. Not bad for a product that launched barely two weeks before the end of AT&T's reportable quarter.
Verizon doesn't have a brand-new killer phone, but still added 1.1 million new wireless accounts. And a refreshed version of the BlackBerry Storm is coming up soon, courtesy of Research In Motion (Nasdaq: RIMM ) .
And poor old Sprint? "The widespread visibility surrounding our record-breaking June launch of the Palm Pre handset gave us an unprecedented opportunity to showcase these improvements to customers as 'a new Sprint,'" said CEO Dan Hesse. That's the best he could do. There is no mention of how the company stewarded that "unprecedented opportunity" and no word at all on the Pre's sales. If the handset was a smashing success, you'd expect a bit of braggadocio here. There was none. And the Pre was on sale for nearly all of June, giving it plenty of time to make an impact.

Sprint lost about a million post-paid subscribers in the second quarter, but gained 770,000 prepaid customers to its Boost Mobile operation. After buying out the shares of Virgin Mobile USA (NYSE: VM ) it didn't already own, Sprint looks destined to become a pay-as-you-go powerhouse -- while the traditional subscription business withers and dies.

I'd buy shares in Sprint's prepaid business if I could, but there's simply no way to make that sort of targeted investment today. Call me when you see a spinout announcement, will you? Thanks, dude. Just remember that holding your breath in the meantime could be dangerous.

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Apple is a Motley Fool Stock Advisor selection. Sprint Nextel is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (9) | Recommend This Article (17)

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 icon found on every comment.

Report this Comment On July 29, 2009, at 1:13 PM, ejazz2095 wrote:

I hate Sprint, I'd love to see them go out of business.
Report this Comment On July 29, 2009, at 1:58 PM, whysam wrote:

And if Sprint weren"t around, you'd have to start hating the next one down the line, like Verizon or AT&T. Just saying you like to see them go out of business with no justification is inane. 50,000 people work there. I could say I'd like to see Microsoft go out of business because I hate them and that would make as much sense. If I said "because I like Macs better" that would make more sense, but would show the "I hate" part to be as stupid and baseless as this comment. As far as the Motley Fool's go, Sprint silence on the Pre and it's influence on second quarter earnings could be because it only came out June 13, so had less than two weeks to make any impact. Kind of shallow analysis, but I guess that's why they're the Fools.
Report this Comment On July 29, 2009, at 2:32 PM, marv08 wrote:

Well, it (the Pre) really only had about three weeks (it launched June 6th, not June 13th). Still, the fact that neither Palm nor Sprint have issued a single number yet is telling. If the only area that grows is pre-paid... the Pre plays no role there. In 2010 the Pre might compete head to head with the iPhone on Verizon, and it is easy to tell who will get the better conditions then. While Apple will successfully insist on leaving the device unbranded, all functionality intact and the Apple App Store the only store available on the device, Palm will have to bite a few bullets.
Report this Comment On July 29, 2009, at 3:51 PM, PreOwner wrote:

Marv08 is correct, launch June 8... allot of palm folks worked at apple, if I’m not wrong, the guy heading up the Pre helped launch the iphone. I think sales #'s are held back to keep others off balance.
Personally, I love the Pre. You can run multi apps at the same time, actually serf the web, slide-out keyboard makes emails easier to produce, comfy in hand and pocket... It works! A support engineer called me to follow up and mentioned they designed it so you don’t have to buy a phone every 6 months to keep up. Pre lacks apps, but it’s less the 2 months into this. They with be developed, and I would wager that sooner or later, the apple apps with get converted and become available for the Pre. I mean really, how hard could that be for all those app engineers out there???
As for Sprint, hey, 2.5 years ago, they sucked, I mean bad… but they made good changes with the current leadership and have customer service back together better then b4. Now they need to get thru the past mistakes that marred their reputation. look at the flagship plan, UNLIMITED EVERYTHING for $100 a month…
And no, this isnt a commercial, just a satified customer.
Report this Comment On July 29, 2009, at 4:48 PM, mcp24 wrote:

Does this site ever write good articles with valid, well thought out ideas? It doesn't appear so after reading the biased drivel it produces week after week. Hire some new unbiased journalist for once.
Anders, you're an idiot, do some research before you write a story.
Report this Comment On July 29, 2009, at 4:49 PM, cliffordfarquar wrote:

The iPhone exclusivity is about to run out and it runs on the worst data network in the US. Also this phone has among the most expensive data plans. Why would anyone stay with ATT and pay alot more for less? The only reason is the exclusivity of the iPhone.
Report this Comment On July 29, 2009, at 5:20 PM, dlvols wrote:

Everybody needs to calm down...there are always idiots in the world that wish a company would go belly up it's just some idiots divulge their lack of intelligence on threads such as this.
Look long term...when the economy begins to move in the right direction a lot of the "pre-paid" customers will become "post-paid" customers which means new subscribers. Sprint will be ok in the long run but it's just going to take some time.
ejazz ---- i hope you are out of your parents basement soon.... maybe you can supersize my order sometime in the future.
Report this Comment On July 29, 2009, at 8:30 PM, whysam wrote:

Would like fires with that?
Report this Comment On July 29, 2009, at 9:08 PM, InfoThatHelp wrote:

Pre needs to make inroads establishing consortiums and clientele instead of sitting on its haunches waiting for profits to fall out of the sky. Even automobiles need promotions to pull in customers, no merchandise in the world sells itself. blackberry is a sitting duck waiting for Pre to march in and rip off at least a fair chunk of Rim's flagging enterprise clientele and what does Pre do? Nothing!! Well, Rim keeps on annoying people by pumping out old junk like the tour and another junky curve, but so what? there are always enough junkies who would buy the junky blackberries because no one bother to tell them there is a Pre which is much better than the junky blackberries. Move, Pre!!

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