Sprint-Nextel (NYSE: S
) is doing much better, thanks to the sales of iPhones from Apple (NASDAQ: AAPL
). So attractive now is Sprint-Nextel that Apple is reported to be interested in acquiring the communications company. If Apple is kicking the tires of Sprint-Nextel, it should also be an appealing investment to Samsung (PINK: SSNLF
Both Apple and Samsung could utilize Sprint-Nextel, which is certainly selling cheap. At present, Sprint-Nextel is selling at a price-to-sales ratio of just 0.38. When the iPhone is introduced by Apple in either September or October, as widely reported, Sprint-Nextel will become even more attractive.
Already alluring is the earnings-per-share growth for Sprint-Nextel. This year, earnings-per-share growth for Sprint-Nextel is 16.79%. Next year, the earnings-per-share growth rate for Sprint-Nextel will be 37.20%. Not only is that a favorable trend, for the future, it is a tremendous improvement over the present quarterly earnings-per-share growth rate of a negative 61.89%. Over the past five years, earnings-per-share growth rate for Sprint-Nextel is a negative 73.48%. That is a very bullish trend for the earnings-per-share growth rate for Sprint-Nextel.
Sprint-Nextel would be an easy target. The institutional ownership is very high at 85.93%. That facilitates an acquisition. If any of these had been interested in pursuing Sprint-Nextel on their own, a move would have been made much sooner as the 52-week low for Sprint-Nextel is $2.10.
Acquiring Sprint-Nextel would give Samsung or Apple its own wireless network. Both have plenty of cash to build it out for other needs. For Apple, this would provide the opportunity to bypass cable operators should its rumored television device appear as an iProduct. Sprint-Nextel would provide either with a huge competitive advantage and value added in dealings with other companies.
Samsung is coming after Apple. Samsung now sells more smart phones than Apple. Earlier in the year, It just supplanted Nokia Corporation (NYSE: NOK
) as being the largest seller of mobile phones in the world. There was even a rumor earlier this year that Samsung was interested in Nokia Corporation. It is going to introduce the new Galaxy Note on August 29 to take away the thunder from the unveiling of the iPhone 5 by Apple in the fall.
Both Apple and Samsung have plenty of cash. With a share price of around $4.35, the market capitalization for Sprint-Nextel is around $13 billion. Paying a 50% premium for Sprint-Nextel would make it about a $20 billion buy, which hat is pocket change for both Samsung and Apple, both of which are highly profitable companies with loads of cash on the balance sheet. In addition, Sprint Nextel has $2.25 in cash per share to offset the purchase price.
The share price of Sprint-Nextel is certainly acting as if a takeover or major investment is in the works. Over the last month of market activity, Sprint-Nextel is up by 31.91%. Year to date, it has risen by 85.47%.
Now trading around $4.35 a share, the mean analyst target price for Sprint-Nextel over the next year of market activity is $4.68.