October has been an ugly month for Sprint Nextel (NYSE: S
) as it competes against Microsoft (NASDAQ: MSFT
), Google (NASDAQ: GOOG
), AT&T (NYSE:T
) and Verizon Communications (NYSE: VZ
) in the mobile industry.
Sprint Nextel reported earnings on Wednesday that beat estimates and posted the smallest quarterly loss in four years. A gain in subscribers was also posted. Yesterday, the stock closed up almost 5%. Still, for the week, Sprint Nextel was down over 10%.
This is not just short term disfavor with Sprint Nextel due to a horrendous performance by its top executives at a recent press conference introducing the iPhone 4S. Over the last six months, Sprint Nextel is off by more than 50%. In October, Sprint Nextel was downgraded 3 times. Yesterday, Sprint Nextel was downgraded by Gabelli.
However, from late July to late August, Sprint Nextel was upgraded three times. The short float is 3.10% (5% is considered to be troubling). Insiders are buying at Sprint Nextel. In addition, almost 90% of the stock is owned by institutional investors, who are not bailing on the company. According to an article in The New York Times
, "Sprint Reports Smaller Loss and Gain in Subscibers," Sprint Nextel added 1.3 million new customers in the third quarter, the most since 2006.
If Sprint Nextel can continue to sign up new customers it will prevail against the likes of Verizon, Microsoft, Google, AT&T and Apple. Operationally, Sprint Nextel is as solid as any other company. Financially, it must recover. The only way this will happen is to bring in new customers and ring up profits through long term relationships that generate greater revenues on sales and service. It worked for Japanse car companies and it could work for Sprint Nextel with the iPhone 4S and its unlimited data plan.