Sprint is sprinting towards disaster

Sprinting

There are two signs that point to a company entering into “desperation mode”: big cuts and big investments.

Big, risky investments often signal prosperity at large companies, but they can also mean the exact opposite as companies try to buy their way out of bad situations and stagnant balance sheets. The latter seems to be the case with Sprint, a company that is committing a lot more money than they plan on bringing in over the next couple of years.

First, there’s the iPhone. While the initial announcement that Sprint was getting the iPhone was met with glee, the decisions they’ve made since them have investors and analysts scratching their head. Sprint plans on offering unlimited data on the Apple offering, but they’ve also committed to $20 billion over the next 4 years. This news was enough to send some investors for the hills, but today’s actions have the remaining investors even more upset.

Shares fell 13% after they outlined their plan to spend $7 billion on a network upgrade.

“They’re going to be spending more money than they’re bringing in for the next couple of years… even before iPhone costs,” Hudson Square analyst Todd Rethemeier said.

An angry batch of investors questioned the company’s choices during a conference today. One well-applauded question surrounded Clearwire, a company owned by Sprint on the verge of bankruptcy that has more spectrum than Sprint. Why would they spend billions when they have a majority stake in the wireless telecommunications network operator already (with much of the money potentially going to Clearwire’s competitor, LightSquared)?

When in doubt, spend. That’s one way of looking at the situation, but it’s not giving investors the warm and fuzzies. Has Sprint made a batch of fool’s bets in the last few weeks that are sure to wreck the company or do they know things that analysts and investors do not? Will the iPhone save the company or help to bankrupt it? Are they sprinting towards disaster?

It seems like they just may be.

Written by Rocco Penn

A tech blogger, social media analyst, and general promoter of all things positive in the world. "Bring it. I'm ready." Find me on Media Caffeine, Twitter, Facebook, and Google+.
SEE MORE ARTICLES BY "Rocco Penn"

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3 Comments »

 
#1
D
October 8th, 2011 at 3:42 am

The only thing Sprint is suffering from is an overpaid underperforming executive team and a misguided Board of Directors.

 
 
#2
Anonymous
October 8th, 2011 at 10:51 am

How evident in this snark article is the core breakdown of corporate sleazitude. People rant about how cheap products from China have made more people unemployed in the history of the world. People are stunned at how corrupt and antisocial corporations are and how it take a sociopath to run one… its the…Stockholders.! If a corporate head (by any means necessary) doesn’t turn an immediate stock up tic or the profits drop… The stockholders kvetch.

 Right now, and I have no love for Sprint, the reception is almost flawless. I travel up and down the eastern seaboard and can get a crystal clear call 90% of the time. I am in important conversations with people on At&T and Verizon all the time.. In the middle of a call.. Gone.. Does the product matter to the investor class?

 I see people “sprinting” outside to talk to people on their iPhones …er..AT&T (again). Wow shame on Sprint for trying to improve their coverage… I hope the sleazeball investors put all their money in Bank of America stock..

 
 
#3
SEO Services
November 5th, 2011 at 6:54 am

Most Informative post.

Sprint should take some important steps to survive from disaster.

 

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