This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Sprint Preps Price War

Sprint's (S) pain will soon hurt rivals as the wounded telco readies for a price war.

New Sprint chief Dan Hesse is busy picking a new management team and rewriting a strategy to lift the No. 3 wireless shop out of its subscriber-shedding nose dive. Hesse has already put a freeze on new developments in the company's bold move into fourth-generation network technology called WiMax.

Among the next steps being considered, say people familiar with the company, is a speed-up of the network migration of Nextel's iDEN users to CDMA, and a possible sale of the iDEN network.

But another move could make waves for the otherwise smooth-sailing wireless industry: Sprint is likely to overhaul its pricing plans in an effort to keep and win back customers.

With more than two out of three people in the U.S. already using cell phones, the number of potential customers is limited and growth has slowed . And increasingly, one company's growth will have to come from another company's user roster.

Price-cutting in wireless is almost nonexistent. Instead of lowering prices, telcos have preferred to boost monthly minutes in their promotions. That may soon change, say observers.

In desperation, Sprint could cut its monthly service charges, or, in a move dreaded by other players, the company could adopt fixed-rate unlimited-usage programs similar to smaller telcos like Leap Wireless (LEAP - Get Report) or MetroPCS (PCS).

The speculation comes as Sprint said Friday that it was slashing 4,000 workers and closing 125 stores in an effort to bring costs down. Sprint says it will take a charge of about $200 million, or roughly $50,000 for each employee it sends off with severance pay.

The Reston, Va., telco says the cost cuts will save an estimated $750 million in annual expenses.

Sprint's struggles date back to a botched merger with Nextel and the exodus of big-spending Nextel customers. The decline of Sprint and Nextel has served the competition well.

Both AT&T (T - Get Report) and Verizon Wireless -- jointly owned by Verizon (VZ - Get Report) and Vodafone (VOD) -- will have very strong subscriber numbers later this month.

But good times may not last. Verizon was down $1.82 to $39.09 Friday in the wake of Sprint's announcement.

Investors, already concerned that the free-spending consumer has put a lock on the money as the economy cools, are starting to take cover ahead of a damaging price battle in wireless.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
S $5.22 2.50%
T $34.50 -0.39%
VZ $49.50 0.06%
VOD $34.58 0.00%
LEAP $0.00 0.00%

Markets

DOW 18,190.22 -98.41 -0.54%
S&P 500 2,106.65 -10.74 -0.51%
NASDAQ 4,976.3340 -31.7620 -0.63%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs