Things don’t get much more humiliating for a big public company than when the Wall Street Journal runs a piece that says the firm cannot hire a No.2 executive. SprintNextel (S) is also facing a 2007 with flat revenue and operating margin pressure.
Hard to imagine how things could get much worse. And, the stock price reflects that. In April, Sprint’s stock traded near $27. If the stock trades above $17 now, it is good news. But, short interest in the stock fell nearly five million shares to 58 million in January.
Anyone who thinks Sprint will go higher has to bet that management can move subscription growth from it current anemic position to a rate that parallels Verizon Wireless (VZ) and Cingular (T). That’s a tough act.
The other gamble in the stock is that the national WiMax network that Sprint is building will attract customers to its next generation wireless broadband network. With big players like Mototola (MOT), Samsung, and Intel (INTC) backing the technology, at least the company has put itself in the race.
Not everyone is willing to bet that Sprint will lose.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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