Sprint Nextel Corporation: business overview and market analysis

Sprint Nextel

Stock Analysis: Stock prices and trends (Increasing? Stable? Why?)

When you analyze the stock from a technical standpoint, it is clear that shares of Sprint Nextel (NYSE: S) are in bearish trend. This is because there was a close below the 200 day moving average in late July. Since that time, prices have been declined by 52% and are now trading at $2.26. This is when the stock formed a short-term bottom and has been continually trading higher by testing the 50 day moving average. When all of this is occurring, the volume has fallen off (with the company experiencing some of the lowest levels in the last year). These different elements are significant, because they are indicating that the price of the stock is unstable over the short to medium term. (Weinstein) ("Sprint Nextel")

The reason why, is because the company is exhibiting a classic trading pattern that is taking place during bear markets. This is when the price of the stock will go into a long-term decline and will fall to its 52-week lows or support levels. At which point, prices will begin to appear as if they have stabilized and are moving higher. (Weinstein) ("Sprint Nextel")

However, these kinds of patterns are considered to be bear rallies. The reason why, is because the stock has very low volume and there was no significant changes to convince traders of positive developments. Furthermore, there is gap between $4.50 and $5.26. This is when the stock first broke down back in late July 2011. In order for Sprint Nextel to see any kind of significant increases, requires that the stock begins to exhibit heavier than normal volume, consistent price appreciation and a close above the 200 day moving average. Until these conditions exist the odds are higher that the stock will head lower. To avoid these kinds of situations requires monitoring for these kinds of trends and reacting when these conditions are present. ("Sprint Nextel")

Current business strategy (growth, downsizing, stability, etc.), management practices (Centralization? New Policies, etc.), marketing practices (Cost strategy? High quality strategy? Niche strategy? etc.)

Currently Sprint is going through a prolonged period of downsizing. This is because the company is experiencing higher costs associated with attracting new subscribers and they are losing postpaid phone clients. To deal with these issues they have been focusing on using centralization as a part of their strategy. This is when upper management will establish the basic approach as to how the firm can increase their market share and earnings. During the last quarter, they have seen an increase in subscribers and higher costs to attract new customers. As a result, the marketing practices of the firm are having an impact on the way they are able to reach out to potential clients. Where, they have been focusing on select segments of corporate subscribers and on the low income customers (through the purchase of postpaid plans).

These different elements are important, because they are showing how the basic strategy that is being utilized is hurting their ability to compete. As they do not have the same kind of nationwide coverage, in comparison with other carriers in the market place (i.e. Verizon and Sprint). This is an issue that is causing them to miss out on key segments that are helping to increase their overall bottom line results.

Evidence of this can be seen by looking no further than earnings of the company over the last four quarters in the below table.

Sprint Nextel Quarterly Earnings over the last Year

Quarter

Results

$-.29

$-.15

July 2011

$-.28

September 2011

$-.15

("Sprint Nextel")

These different figures are significant, because they are showing how the earnings per share of the company have remained stagnant over the last year. This is an indication that current strategy is hurting the bottom line numbers of the firm.

Current issues and recent events affecting the company either positively or negatively (news, press releases, new product releases, scandals, organizational changes, etc.)