Is Now the Time to Buy Sprint?

Most Fools don’t believe in Sprint Nextel (NYSE: S  ) . More than 2,000 have rated the stock in our CAPS database, and their consensus opinion is that it deserves just two out of five possible stars. Ouch.

The few who do believe in Sprint are betting that its fourth-generation (4G) WiMAX network, built in concert with Clearwire (Nasdaq: CLWR  ) , will fuel future revenue and profits.

“The wireless sector is poised to grow exponentially in the near future and live content that requires lots of bandwidth will necessitate a 4G platform,” Foolish investor surena wrote last month.

Uncork the Champagne, Fool.

Sprint and Clearwire this week announced its rollout schedule for WiMAX service in three of the country’s biggest cities: Los Angeles (Nov. 1), New York (Dec. 1), and San Francisco (late December). Comcast will partner with Sprint and Clearwire in lighting the San Francisco network.

Two things make this news interesting for investors. First, the timing. Verizon (NYSE: VZ  ) plans to light up a competing network based on its version of the long-term evolution technology in 38 cities by year's end.

Second, and more important, is the network itself. Although Verizon is reported to have struck a deal with Apple (Nasdaq: AAPL  ) , these reports also note initial iPhone models built for its CDMA network won’t be able to take advantage of LTE service. AT&T (NYSE: T  ) , meanwhile, doesn’t plan to offer LTE till mid-next year, according to industry news site Fierce Wireless. Throw in the fact that Sprint has tested 4G-ready phones while other carriers will be rushing to fill out a launch lineup, and Sprint could enjoy a few months of a monopoly on 4G phone service in three of the nation’s largest cities.

Sprint. Monopoly. How often have those two words met in the same sentence?

So far, Fools are more excited about infrastructure suppliers  such as Skyworks Solutions (Nasdaq: SWKS  ) and Qualcomm (Nasdaq: QCOM  ) than they are Sprint. So be it. Sprint Nextel may not be growing as fast as it once was, but at four times its free cash flow, the company is trading as if its WiMAX rollout is worthless. I doubt that very much.

Now it’s your turn to weigh in. Would you buy Sprint Nextel at these levels? Please vote in the poll below and then leave a comment to explain your thinking.

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

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Apple is a Motley Fool Stock Advisor selection. Sprint Nextel is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool owns shares of Apple and Qualcomm and is also on Twitter as @TheMotleyFool. The Fool’s disclosure policy is maxed out for the moment. One moment, please.


Read/Post Comments (1) | Recommend This Article (7)

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 October 20, 2010, at 3:40 PM, spokanimal wrote:

    As you say, it's the 4G network that counts and sprint doesn't own it... Clearwire owns it and sprint just owns 54% of Clearwire.

    With Clearwire selling at only 1/4 of book value (source: Value Line), I'd much rather own Clearwire than Sprint and all it's baggage.

    S

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1338760, ~/Articles/ArticleHandler.aspx, 10/23/2014 2:09:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement