Investing to Wealth

Sprint Nextel Corp. (NYSE: S) recently posted another dismal quarter as the third-largest wireless carrier in the U.S. lost over a million customers while finally writing off the last $1.6 billion from the disastrous Nextel merger of 2005. The company continues to have slick marketing, a first-class nationwide wireless network and improved customer service. None of these mean a thing if it can't retain customers and recruit new ones from the competition.

As such, Fitch recently downgraded Sprint Nextel shares to a "BB" rating from a BB+ rating. Its main line of reasoning: Sprint faces increased competition and customer choices in a ravaged economy. Even though the wireless industry is really not in the commodity business, customers sure view it that way. The Apple, Inc. (NASDAQ: AAPL) iPhone being sold by the competition does not help a bit. In fact, that single handset was the biggest reason for subscriber growth with AT&T, Inc. (NYSE: T) in its most recent quarter.

Sprint may have improved quite a few things in the last year, but customer perception may not be at the level that it needs to be. It's the same with the U.S. automakers. Detroit can produce a car every bit as reliable as the global competition, but inconsistency in customer perception and product reliability in the last two decades is a stain on current efforts. With the Fitch downgrade, Sprint's commitment to the iDEN network (the actual "Nextel" wireless network) was called into question. Why doesn't Sprint jettison that network and integrate its customer base? It's 2009 and if this has not happened by now, it probably won't.

Filed under: Analyst upgrades and downgrades, Sprint Nextel Corp (S)

Sprint (S) gets rating downgrade as customers flee in latest quarter originally appeared on BloggingStocks on Thu, 26 Feb 2009 13:15:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

---

Premium Jigsaw accounts now include a free copy of TemplateZone's High Impact Email 5 Professional or OfficeReady 4.0 Platinum, arming Jigsaw members with the marketing software tools needed to create communications that stand out and get noticed. (PRWeb Feb 26, 2009) Read the full story at http://www.prweb.com/releases/2009/02/prweb2182544.htm

>> Read more