Are you familiar with the story of Chicken Little?
"Henny Penny, more commonly known as Chicken Little and sometimes as Chicken Licken, is a folk tale with a moral in the form of a cumulative tale about a chicken who believes the world is coming to an end. The phrase "The sky is falling!" features prominently in the story, and has passed into the English language as a common idiom indicating a hysterical or mistaken belief that disaster is imminent."
I agree. Today's drop in price mostly reflects retail investors who fear "diluted" shares (as Osprey was eloquent enough to point out), but overall investor sentiment is good. Raising funds this way will allow the company to continue to expand and develop without relying on a merger or sale in the short term.
I don't agree. I'm not sure why, but you seem to continually misinterpret what I'm saying. I have never, at any point, suggested that the company could not be sold at all or that anyone was required to own it indefinitely. I'm saying that if the party holding the controlling interest intends to make a move that will intentionally harm the company, the remaining investors will take legal action to prevent it.
Fairly straightforward concept, no? And if the party owning the controlling share of the company was aware of this impending conflict, the most reasonable reaction would be to abandon the contested plan.
First, you're wrong about PCS and T-Mobile. It was a reverse merger- MetroPCS acquired 100% of T-Mobile's stock, in exchange for giving DT 74% ownership in the new entity. Essentially MetroPCS absorbed TMUS, changed their stock ticker, and handed over control to DT. Second, nobody said anything about PCS at all.
And third, as I've told you before, having a majority of voting rights does not mean you're able to make decisions that are blatantly detrimental to the company. It's one thing to make a decision that the other investors disagree with. It's another to make one that would clearly harm the company while leading to personal profits. The latter would surely lead to legal action against them. And in a more general sense, taking a giant dump on their co-investors wouldn't do much for investor sentiment in DT's other investments.
No, you don't have it right. DT wants to sell their controlling stake in a business that other people also own part of. Those other people would take legal action against DT if they attempted to cash out at the expense of the company. That legal action would cost DT a big chunk of that "retirement" money, add a significant amount of time to the process of changing ownership, and most likely scare away the buyer before things got that far anyway. DT, being aware of this, declined further negotiations with Iliad.
You are thinking like a commodity investor. You have to remember that this is a business which intends to continue operating after a sale, not something like gold that you can buy and dump without consequence.
Yes, but in this case they're trying to sell a controlling stake in the company. If they weren't, I think you'd be correct.
I don't think they have anyone's interest in mind beyond their own. But that's also why they can't sell out at the expense of the company; it would be a sure-fire way to start a long and expensive legal battle with the remaining shareholders, and they're literally trying to cover their assets.
They turned down Iliad because it wasn't qualified to operate the business. A higher bid wouldn't fix that problem, so no counter-proposal was necessary.
We'll have to agree to disagree. Even when the network is fully built out and the spectrum is purchased, the network costs a ton of money to operate. Yes, increasing customer numbers is a good way to accelerate the process of becoming profitable, but not if the revenue they bring in is less than the cost of providing their service. Now, are the customers really paying less than it costs? Probably not. But giving them a discount only increases the time it'll take to break even with profits. That's not necessarily a bad thing if your company has a 5-10 year turnaround plan and you can get the customers to stick around, but it hurts the short term operating budget and profit numbers.
Here, I have something nice to say about Sprint: These recent moves DO indicate that they're thinking long term, rather than attempting to bandage current problems. With the drop in stock price, if you have faith in Son and Claure, a long S position wouldn't be the worst idea. That's a leap of faith I wouldn't take, but I can see the appeal.
I can only speculate on future M/A, no real idea what that will end up like. DISH is still a wild card and I think that's just how Charlie likes it until he's ready to show his hand. From an investor's perspective, the $36 offer would have been great, but it's still my opinion that DT turned it down because they knew Iliad wasn't capable of financing the purchase or competently operating the business. As I'm sure you know from seeing Sprint and Softbank interact there are lots of politics involved in M/A's. And sometimes having the majority of the votes isn't enough to get away with making a bad decision for the company.
Jeez dude, you seem angrier than usual. Rough holiday week?
I've already answered your question, but I'll do it again because it's short and simple. If you charge half of what you used to charge for the same amount of product, you're collecting half of the profit that you previously were (or would have been).
I didn't say the total earnings for Sprint would drop by 50%, but rather that the amount of profit that would have been generated by the customers who are now getting this promotion will be half of what it otherwise would be (ie, not full price). It's something that you would have blasted TMUS for doing, but it's a good idea for Sprint now, because they need more customers if they ever want to be profitable again. And it's good for the entire market because it encourages competition.
You're so mean with your namecalling, it's almost like you take all of this seriously.
The network definitely does not cost "next to nothing" to operate; if that were true Sprint's operating expenses would be significantly lower. Since their build-out is "in place" they should have positive earnings next quarter, right?
That's not a new idea, Verizon does exactly the same thing with their EDGE program. If you want a discounted service rate, you have to maintain a monthly payment on a phone. You can pay off the full, unsubsidized price of the phone at any time and go month-to-month or leave the company, but you lose the service discount. It's how these companies lock in customers without calling it a "service contract"; sacrificing up-front profits for the benefit of a longer duration of patronization. And then they give you an incentive to "upgrade", starting the cycle over. I don't have anything bad to say about Sprint doing this, they're just catching up to the rest of the market now.
I'm not going to lie, I didn't read most of your post because as usual you missed the point and then went off an a tangent. This is very simple stuff: If it costs money to manufacture a product or operate a service, and you sell it for half of that cost, you are losing money. Every new customer ends up costing you money, rather than earning it. I don't care what you did with your investments, and that's irrelevant to Sprint's current "plans", which seem to be an attempt to maximize their operating expenses while minimizing their profits.
1/2 price billing means halved earnings. Not a great idea when your profits are negative and your stock is flirting with yet another 52-week low. And I don't think it's going to have the effect you're hoping for- if you severely undervalue your product, customer perception will be that your product has an exceptionally low value.
Was that directed at me? I understand that perfectly well. My point is that while the big two can certainly make it more difficult for TMUS to enter some new markets, TMUS can bow out when the bids get too overinflated, and turn to alternative sources instead. That, and the licenses are specific to geographic areas, so they may not face as much competition in areas that the big two already have licenses for.
Which big boys? TMUS isn't competing for the same spectrum licenses as V and ATT, and S isn't even participating. Maybe they found a more financially efficient source of spectrum elsewhere.
I haven't been on this site for several days, spending time with family is more important than trash talking about stocks. Happy Thanksgiving, ya big turkey.