Sprint Nextel (S)-I can't see why to own this

One of my readers had asked about Sprint Nextel (S). Being that they are releasing their numbers tomorrow morning I look it moght be a good earnings play for at least a trade.

Sprint provides wireless and wireline products for consumers, governments and businesses.They serve the 50 states including Puerto Rico and the US Virgin islands.

I remember when Craig McCaw brought Nextel to the market and back in 1999 and 2000 we were building a position in it as a takeover play. He had a history of building great companies based on a great product and being first to market with it.

It took some time but eventually it happened and we reaped the benefits. Craig knows how to build companies, sell them off and move on to the next. A true entrepreneur if there ever was one.  I'm not sure what he would say about the current state of Nextel but in looking at the company and how it's been managed he might not even be able to turn it around at this point. Why? Let's take a look.

http://finance.yahoo.com/q?s=s

Since 2000 the stock has gone from over $70 to the current $3.60. Sales growth has been down the last 2 years (2.1) and (11.2). EPS growth the last 3, 5 and 10 years is down a whopping (1,1092.9), (568.8) and (336.1). Gross margins had stayed steady at a little over 50% since 04'. Operating margins though have continued to go down though. Sales were off in 07's and then or course in 08'. So they couldn't grow the company in the best of times.They pay no dividend but the book value is $6.86 so it's trading under book if I'm a value guy and looking at it as an investment for the long haul. The cash flow is not particularly good at $1.96 pps.

The competitors are AT &T (T), Verizon (VZ) Vodaphone (VOD) T Mobile/Deutsche Telecom AG (DTE) and several others. These are the major players though. A tough and crowded arena with companies that have strong balance sheets, strong marketing and in the case of Verizon very well run. Hey they even pay a dividend. However if you look at VZ numbers who came out recently that stock went down on the numbers even thought they were pretty good.  AT& T (T) had good numbers too and had did what did that stock do? Not much.

Sprint (S) has 2.82 Billion shares outstanding of which 1,100+ Institutions own 90+% of the outstanding float. In the last 3 months there have been a net purchases by these institutions were 24.3 mil shares. Short interest is sitting as of 1/15/10 at 3.38% of the float or 97,145+ mil shares an increase from December of about 7 mil shares.

Maybe these 1,100 institutions are looking for a takeover? That I couldn't say. This much I can say that if your losing market share, lose money and have dwindling sales even in the best of times chances are better than worse your numbers are not going to be good tough times. I'm trying to figure out why shareholders would allow this company to be run into the ground and not make huge changes at the management level across the board. Surely if McCaw was running it it would never have gone down this path since he puts his heart and soul into everything he does. It's his baby. This company has been run like someone's piggy bank or they just didn't care.

I met this very successful businessman when I was a kid and he had this expression that I never forgot. He would say "Show me how you walk". Well Sprint if you want me to be a shareholder than increase sales to start. Till then if 'm going to own anything in this tough arena  I'll take VZ first since they pay a good dividend, a great network, improving customer service and the management cares.

The boys over at Credit Suisse are looking for signs of a turnaround and have a $6 target price. Hey guys they haven't been able to turn around anything in 10 years! How about showing the shareholder and the public a up Qtr. before you actually call for a turnaround.  Show me how you walk.

Case in point-Ford Motors (F) clearly walked the walk. Maybe Sprint can get Mulally to give them some tips on how to turn around a company. Hell I'd give a shot I certainly couldn't do any worse.

I bought (S) Feb 3.5 puts @ $.14 so far I'll probably add to add it before the close and try to nake a few dollars on (S) missing numbers.

Someone, anyone show me why I would want to own Sprint and not just because it's $3.60 and it's a big company. 

Remember: Pigs get fat, Hogs slaughtered. Be a Pig!