What is that stock market term that lowers the stock price to flush out all the weak hands and then buying it cheap, and the stock price returns to normal level, as if nothing had happened? I forgot.
That idiot has been preaching about buying Sprint at $1.75. Can someone be that stupid?
Unless there is a massive global financial meltdown, there is no way this stock will EVER go down that low. So stupid.
Based on my rough estimation, I had predicted ~400,000 post-paid using 1.5 million. But Sprint added >500,000 with 1.8 million iPhones sold. Unfortunately, there was Nextel side, (iDEN network)which lost more than 300,000, thus the net gain of about 160,000.
Lot of people however are focusing on the wrong number (and too many people got scared). They should instead be looking at the Sprint' side, and not the Nextel side, (which will be phasing out soon enough). Everybody knew that iPhone would be expensive (no surprise there), but look at the huge number of post-paid additions on the Sprint's side. That is the impact of iPhone, with 40% new subscriptions) Compared to AT &T (with larger customer base and bringing in ~700,000 post-paid, Sprint's addition of 500,000 is huge. Also remember that Sprint stole more customers from other carriers than it lost to them.
In the coming years, Sprint will continue to improve on its post-paid additions (provided they have the Unlimited plan), and especially once they finally get rid of Nextel off their back. But I think the stock prices will be in for a rough ride for a while, due to various interpretations of the mixed result, fitting their own agenda.
Churn rate refers to the rate of defection to different companies. Followings are the churn rates of the "lucrative post-paid numbers".
For the 2011 year:
For Sprint, past Quarter's churn rates do not mean much, since the iPhone impact is absent. BUT, even without the iPhones, their post-paid loss was decreasing. In Q3, their loss was only 44,000.
VZ is pretty stable, but notice the sudden increase in the churn rate of AT&T in Q4, ironically the quarter Sprint acquired the iPhone. Now isn't that interesting. I wonder where people went.
With AT&T having the worst customer satisfaction, and the recent increase in the fees (for the new customers),PLUS the Apple's higher than estimated total iPhone sales in Q4 (~37 million), I am pretty convinced that Sprint will not only exceed estimated iPhone sales, but the estimated post-paid subscriber numbers as well, in this Q4 and beyond (some analysts are estimating ~250,000 post-paid additions). I see continued defection from AT&T.
The earnings will obviously be heavily under pressure, but then again, Sprint already expected that they will not profit until 2014. Thus no big surprise there.
Prior to the Q4 earnings report, let the stock go down or do whatever. Let people say bad things about it. But once the Q4 report is out, the stocks will move up considerably.
In Q3, Sprint added a net 1.3 million subscribers in the July-to-September period, the best result since 2006. Sprint however, lost subscribers from its lucrative post-paid contracts, but at a relatively low rate: 44,000.
For Q4, let's have fun rough estimating for Sprint based on Verizon's performance:
in Q4, Verizon sold 7.7 million smart phones (4.3 million iPhones) and brought in 1.2 mil new post-paid subscribers.
That is 7.7/4.3 = ~ 1.8x (ratio of total smart phones/iPhone) and 7.7/1.2 or ~6.4x (ratio of total smart phones/new post-paid subscribers).
IF assuming Sprint sold 1.5 million iPhones in Q4, that means
Sprint has sold 1.5 x 1.8 = 2.7 million total smart phones.
Subsequently, Sprint then can expect to bring in 2.7 mil/6.4 = ~ 400,000 new post-paid subscribers.
This is a relatively small increase in the post-paid subscriber numbers, but remember, Sprint had been losing post-paid subscribers until Q3, and without iPhone, it would've continued. Sprint had to get the iPhone to stay alive (something about iPhone that just makes some people go crazy). Given the Network Vision and so called unlimited data plan, I can see the subscriber number continue to increase in the future. What you may be seeing is only a tip of an iceberg.
Due to the margin however, Q4 revenue will probably be heavily under pressure, but then again, Sprint already estimated that they would not be profitting until 2014.
The bottom line is, Sprint is oversold; it is a buy and then hold for the duration.
There is a huge difference between Kodak and Sprint:
Kodak tried to raise money to avoid BK by even resorting to selling patents, but it didn't work. Thus-->BK (Chapter 11: reorganization). If it hadn't been for Citi group to finance them during BK reorganization, then Kodak would have no choice but to liquidate whether they like it or not. Additionally, if Kodak are not profitable soon enough,
Citi will cut off their line of credit, and that would be the end of Kodak, altogether (provided no others are willing to extend them credit).
Sprint, in the other hand, resorted to bond market and easily secured financing and paid off their debt maturing in 2012. So absolutely no need for BK.
The situation is very different with these two companies.
The fact of the matter is, except for some people
at Sprint, nobody truly knows what the impact of iPhone
has been on Sprint. This is therefore, a period of uncertainty for Sprint in terms of stock prices, and given the huge debt load, it is not surprising that talk of BK has been floating around, pressuring the stock prices(but then again, BK talk has been going on since several years ago anyway).
But Q4 will change all that, as it will clarify the situation and set the tone for things to come.
In short, Sprint has to beat the consensus earning estimate and they must show increase in the lucrative post-paid subscribers. If they do, this stock obviously will spike. It is simply not enough that they sold more iPhones than initial estimates.
Sprint states they need 4~5 billion for Network Vision.
A few months ago, Sprint used bond market to raise
4 billion (although raising 2 billion would've been ok),
and this is a testimony of investor's confidence in Sprint's
turn around. For Network Vision, I suspect them resorting
to bond market "as needed", and I dont think they will
have much problem obtaining financing then either.
One important thing to remember about BK reorganization
is that it is a huge gamble for the company, since it critically depends on whether any creditors are willing to continue to extend credit to allow the company to stay open during BK. Without continued financing, company will have no choice to liquidate.
In the midst of a major turn around, do you think Sprint will take that chance?
BK, usually brought on by the creditors, is a messy process & it is the last thing a company wants to be in.
In Sprint's case, they borrowed money and paid off their entire loan maturing in 2012. So, no need for BK.
They "can" decide to BK themselves and either liquidate or reorganize. Liquidation will not happen since this will result in job losses & Sprint is also in the midst of a major turn around, & their future looks promising.
Sprint "can" reorganize via BK, but they would want to stay open during the messy BK process, which means they "might" need to secure financing to operate the company during BK. But then again, they already secured financing and paid off their entire loan maturing in 2012 altogether anyway. So no need for BK here also.
Simply put, no creditor is knocking on Sprint's door
for their money, so why would Sprint BK, ruin its credit rating and put itself in a messy BK situation? They've got better things to do.
So any talk of BK is nonsense and premature at this point.
But the unfounded fear of BK is spooking everyone it seems,
as the stock drops more than it rises.
Fear is indeed greater than greed.