Sprint-Nextel: Good news from Apple and AT&T, bad news from Clearwire (S, CLWR, T & AAPL)

With AT&T's (NYSE: T) acquisition of T-Mobile looking doubtful and revenue from sales of the iPhone 4S from Apple Inc (NASDAQ: AAPL) looking hopeful, it was a good week for Sprint-Nextel (NYSE: S) until it had to bail out Clearwire Corporation (NASDAQ: CLWR) at the end.

Sprint-Nextel (S) owns a large stake in Clearwire.To allow Clearwire (CLWR) to make a $237 million interest payment, Sprint-Nextel agreed to provide Clearwire with up to $1.6 billion over four years for retail services and additional equity funding.  This is the last thing Sprint-Nextel needed.

According to an article in the Financial Times by Paul Taylor, "Clearwire gains 16% on services agreement with Sprint Nextel," questions remain about Sprint-Nextel's relationship with Clearwire.  This agreement, while boosting Clearwire (CLWR), raises doubts about Sprint-Nextel.  According to Taylor's Financial Times piece, "Sprint owns a large stake in Clearwire but investors have grown increasingly concerned about the relationship between the two companies...particularly about Clearwire's funding requirements over the new few years as it moves towards deploying LTE wireless technology."  Uncertainty like this will always trouble investors, suppressing the share price of Sprint-Nextel.

Sprint's expansion plans, outside of Clearwire, require billions, on their own.  Already, Sprint-Nextel has a debt-to-equity ratio of 1.42.  Its profit margin is a negative 7.57%.  Negative too is the return on equity (-17.56%), the return on assets (-5.02%) and the return on investment (-5.92%).  Analysts downgraded Sprint (S) three times in early October.

However, Sprint-Nextel was up more than 9% for the week.  On a quarter-by-quarter basis, both sales growth and earnings growth are rising.  Sales of the iPhone 4S from Apple Inc (AAPL) are strong.  The chances of AT&T (T) buying T-Mobile now look weak.  The President and CEO of Sprint-Nextel, Daniel Hesse, just bought 100,000 shares of the stock in early November at $2.82 a share (its is now around $2.60).  The price-to-sales ratio is 0.23 and the price-to-book ratio is 0.60.  There is also strong institutional ownership at over 80%, which could be resulting in major changes soon as detailed on www.smallcapnetwork.com in the article, "David Einhorn is Talking, Sprint Nextel better Listen (S, T & VZ)."