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Sprint Corporation Message Board

  • mobilevaluate mobilevaluate Oct 16, 2011 4:34 PM Flag

    Merger or IPO = $10

    Speculative investing such as Sprint Nextel (S):

    Distortion: Normal parameters cause under/over evaluation by analysts and amateurs.

    Solution: Evaluate company from equity funds and competitors view.

    Example:

    1. What is S’s value to competitor in merger and to remove it as competition?

    2. What is the value and potential of the same company in EXACTLY the same situation if it were to be issued as an IPO now?

    3. Estimate for S would be about $10/share (~$30 billion*)

    * Brand, network, customers, employees, start-up costs, patents, spectrum rights, merger synergies, market share, contracts, consolidation margins, potential expansion, iphone launch, etc.

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    • Let me address these flawed point by flawed point:
      1. Value in merger? with $37 billion in liabilities, bond rating so, "junky" they can't borrow any more money at a reasonable rate, an aging network in need of expensive upgrades, no viable 4G solution just as soon as Clearwire goes under or refuses to do further business with Sprint, a nasty reputation for customer service that no amount of J.D. Powers awards apparently can't overcome, NO physical assets (last to go were the towers in July, 2007), hasn't made a profit for over four years...etc.
      Merger value in price per share? ZERO! Why? Because company's one asset, its network, will be available for pennies on the dollar after receivership (which is exactly where it's headed - perhaps intentionally!)
      2. Issued as an IPO? Under what conditions? With NO strategic plan and no 4G offering in a market that's FAR ahead already? Again! Value per share: ZERO!
      Ask yourself when considering the present state of the company pointed out in #1: what is that worth to you? It's worth less than $3/share to the market - and it's trending downward (and there's another disastrous Quarterly Report coming up which'll be presented to the same analysts who called Sprint on the carpet for, "obfuscation" on October 7! They're likely to ask more pressing questions this time around!)
      3. Would YOU pay $10 a share for a company with zero prospects, a MINUS 2.65 P/E, debt-to-equity of 1.39, a profit margin of MINUS 9.5, ROA: MINUS 6.4, ROI: MINUS 10
      You actually think this company makes an attractive investment? HOW? It doesn't even make an attractive SHORT at this point.
      But, then again, unlike geniuses like you, the market thinks it's worth less than $3 at this juncture. Guess you know something they don't, right?
      Good news? You CAN get about 30 cents on the dollar back when you file a loss on your tax return this year. Congratulations.

    • Well based on the price att paid for t-mobil the number 4 us company, them sprint should be around $12 a share.

 
S
5.07-0.02(-0.39%)Nov 26 4:02 PMEST

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