Is Sprint Ready for War?

WiMAX and LTE have been at odds for years, but what has been a cold war should get hot when Sprint Nextel (NYSE: S  ) introduces the first smartphone for its WiMAX network in the first half of this year.

According to Forbes, which first reported the news last week, Sprint has assigned Taiwan's HTC -- maker of Google's (Nasdaq: GOOG  ) Nexus One -- the task of designing a WiMAX-ready Android smartphone. A surprising choice when you consider that Palm (Nasdaq: PALM  ) selected Sprint Nextel as the exclusive carrier for its Pre smartphone.

Even so, Sprint's decision to use HTC may have less to do with Palm and more to do with Clearwire (Nasdaq: CLWR  ) and Sprint's other WiMAX partners, such as Intel (Nasdaq: INTC  ) and, of course, Google.

Positioning for battle and handicapping a winner
Clearwire will play the largest role in this rollout. Already, its would-be national WiMAX network covers 30 million people. The count is expected to quadruple to 120 million by year's end, Forbes reports.

Which telco wins in this arms race? Fools like AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) more than they do Sprint Nextel, even though, of the three, Sprint appears to have the sturdiest balance sheet:

Metric

Sprint Nextel

AT&T

Verizon

CAPS stars (5 max)

**

****

****

Total ratings

1,879

5,001

3,764

Percent bulls

77.9%

94.1%

94.3%

Percent bears

22.1%

5.9%

5.7%

Bullish pitches

278 out of 360

756 out of 806

649 out of 697

Cash and investments*

$9,013 mil.

$6,723 mil.

$6,034 mil.

Total debt*

$21,061 mil.

$72,081 mil.

$62,256 mil.

Current ratio*

1.3

0.7

0.8

Sources: CAPS, Yahoo! Finance.
*Figures current as of Dec. 31.

It'll be an interesting throw-down if nothing else. Verizon will have an LTE deployment ready by year's end, and it has several smartphone partners.

AT&T, meanwhile, says it plans to shift to 4G by no later than 2011. But that won't last. With Sprint's blitz, I'm expecting the carrier to announce the schedule for an LTE-ready iPhone by Christmas at the latest -- just enough meat to convince consumers and businesses to wait rather than switch to Sprint-Clearwire.

In the end, it doesn't much matter whether Sprint Nextel is ready for war with its telecom rivals. One's coming. Having a WiMAX phone, and a committed partner in Clearwire, makes the carrier a dangerous adversary for its larger rivals.

Does WiMAX give Sprint the edge it needs to beat its larger peers? Is Clearwire a multibagger in the making? Share your thoughts in the comments box below.

Google is a Motley Fool Rule Breakers recommendation. Intel and Sprint Nextel are Motley Fool Inside Value picks. Motley Fool Options has recommended subscribers buy calls of Intel. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock picking team. He owned shares of Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy knows its ABCs quite well, thanks.


Read/Post Comments (5) | Recommend This Article (12)

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 February 23, 2010, at 3:40 PM, conradsands wrote:

    4G wireless--which operates at speeds up to 10 times greater than today's 3G networks--could become a reality for many businesses over the coming year. Sprint, the current 4G leader, says it will introduce its first 4G smartphone before mid-year.

    Wireless Profit Margins:

    Verizon Wireless = 45 percent

    AT&T = 39 percent

    Sprint = 18.2 percent

    Now we know where Verizon and AT&T get all that money to run commercials 24x7 and pay out big executive bonuses -- the American consumer.

  • Report this Comment On February 23, 2010, at 5:11 PM, langco1 wrote:

    sprint is a exellent spec stock..i have made money buying and selling it 3 times in the last year....

  • Report this Comment On February 24, 2010, at 2:47 AM, Aryabod wrote:

    Go kid yourselves as much as you want, Wimax is here and already a worldwide standard used in over 146 countries. Wimax's second iteration, IEEE 802.16m, which is to be introduced at the end of the second quarter of 2010 does a real number on LTE. It essentially debunks all the advantages attributed to LTE. Wimax 2 will have download speeds in excess of 100Mbs. Its eco-system is mature and well tested. On the other hand LTE's advantages are all based on theory rather than real world experience.

    For any of these standards to function at optimal speeds, they are going to need the necessary spectrum allocated to them. This is where Sprint is ensconced.

  • Report this Comment On February 24, 2010, at 11:20 AM, badjokes wrote:

    Aryabod is right, WIMAX is tested and will crush LTE!

    just search for info on wimax on the net, its rock solid.

  • Report this Comment On February 24, 2010, at 1:32 PM, mikecart1 wrote:

    Sprint is going to be king in 5 years. In 5 years people will look back and kill themselves for not buying S when it was under $4 for such a long time.

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