Sprint-ing the Wrong Way

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Sprint shares have recently personified the verb implied by the company’s name; trouble is, their running to the downside on the heels of a poorly-received network buildout plan ( Cfax, 10/10) and myriad subsequent downgrades. “We have long worried that Sprint was left with no good options for 4G; for more than a year, they have been stuck between the rock and a hard place of inadequate spectrum resources (outside of Clearwire), and inadequate financing,” said Sanford Bernstein‘s Craig Moffett, who lowered his price target on S to $2.50 from $3. “The degree of difficulty in executing their Network Vision transition will be extraordinarily high… and we think the years 2012 and 2013 will be especially precarious.” A chief concern of analysts is Sprint’s funding needs, which Moffett estimates at approx $4.9bln through ’13, and the likely resulting hit to the company’s FCF. UBSJohn Hodulik expects S to lose $2bln in FCF next year alone, and believes AT&T and Verizon are miles ahead in 4G. After shedding nearly 20% Fri, S shares fell nearly 8% Mon as overall markets staged a nice rally. Shunned by Sprint, Clearwire shares felt more pain, too, falling 8.6% after Fri’s -32.2% debacle.

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