Don't be surprised if your kids come to you one day and ask what a tracking stock was. And don't be surprised if you struggle to find an example. Slowly but surely, these poster children of the go-go '90s are returning to the nest.
Over the weekend, Sprint
Tracking stocks may have made sense in the 1990s when chunky corporate behemoths found themselves harboring rapidly growing subsidiaries. Tracking stocks allowed investors to benefit from the rapid growth subsidiary free of the anchor of the larger business.
Companies like Disney
Wireless was a booming sector just a couple of years ago. However, a cutthroat mentality has kept margins under pressure. Last November's move allowing cell phone users to move their existing wireless number to a new service provider will only make it harder to retain customers in the future.
Even so, this latest move won't come cheap for Sprint, which expects to maintain its quarterly dividend. Sprint PCS investors who once welcomed a lack of income distributions in the pursuit of wireless growth will now give Sprint more mouths to feed the stock's 2.8% yield.
So the tracking stocks have been derailed. Again. Well, at least until the next hot sub-sector emerges.Do you think wireless portability will hurt service providers? What do cellular companies need to do to get back on the growth track? Were tracking stocks a trendy mistake? All this and more -- in the Wireless World discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz barely uses his wireless phone. He does own shares in Disney but of no other companies mentioned in this story.