Why Sprint Shareholders Should Have a Reason to Smile
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
For those tech addicts who may have been following the history of Sprint Nextel (NYSE: S) for some time, they will generally tell you that it has been in a slump for the past couple of years. This slump was generally caused by one of its major arms, Nextel, whose iDEN legacy network was overtaken by newer technology (3G and 4G) thus rendering it redundant in a way.
As a result of this, Sprint had to suffer the loss of thousands of their clients to competitors such as Verizon (NYSE: VZ) and AT&T (NYSE: T). Sprint was, thus, thrust between a rock and a hard place as shareholders were keen to follow the steps that would be taken to deal with the problem.
Seeing there was no way it could save face, it chose the only other option available, which was to completely scrap the service. This move was intended to lure back the large number of customers that left Sprint for rivaling telecommunication firms. Since the process of getting rid of Nextel as a whole is still under way, the effects of the move are yet to be felt but hopes remain high that this was the best course of action. Sprint estimates that by the end of June next year, it will have completed the process and will have therefore dealt with the dead weight in the company that was most likely the cause of its poor performance in the markets.
Adapting to emerging trends
It has been my belief that in order for any stock to prosper in these hard economic times, it will have to show great resilience to competitors and quick adaptation to emerging trends. As such Sprint has taken a dive into the new and exciting world of cloud-based services, which have lately been the most utilized by many. Just a few days ago, Sprint announced that it was planning to provide cloud-based business productivity solutions from Microsoft. It would be offering small and medium-sized businesses Microsoft office 365, which combines a variety of cloud-based versions of productivity services with the latest version of Microsoft (NASDAQ: MSFT).
Basically, office 365 provides a means of securing and easily accessing different resources in the workplace such as conferencing, instant messaging and easy file sharing. This package also includes antivirus technology that is built in and nearly 100% uptime is guaranteed. By venturing into this endeavor, Sprint will bundle up this package with other complementary services that will make getting solutions in the workplace a lot easier. By also merging Sprint’s data packages from either 3G or 4G networks to the plan, businesses will have been given the tools necessary to grow from their present state. Through utilizing cloud technology, which has had everyone in frenzy, Sprint might just be able to woo a great number of clients who will make up for the loss of their past customers. This means that the disappointing earnings that were reported in the last financial quarters may soon be a memory if things go as planned.
Good news from Apple
Despite the fact that the release of the iPhone 4S from Apple was expected to propel Sprint to greater heights, the outcome proved to be the opposite. Whereas many expected a completely new version of the iPhone, Apple just upgraded the features of the previous versions and put it in stores. The eagerly waiting market did not respond well to this, which resulted in Sprint’s poor performance.
There is however good news for shareholders due to the fact that the new iPhone 5 is expected to hit the stores pretty soon. This will be the chance for Sprint to redeem itself and distribute what could be essentially the greatest cell phone for our generation. Sprint is expected to grow with the release, which I’m sure will have many investors letting out a sigh of relief after experiencing such troubling times.
Sprint has always been one of the giant tech stocks regardless of its past problems. Sprint’s future will most likely be in the development of wireless technology and provision of cloud services if all else fails, which is still an extremely bright future. If you are a shareholder, I would urge you not to even think of selling, since this is one of those stocks that are bound to bounce back from whatever slump it finds itself in.
muhammadbazil has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.