NEW YORK ( TheStreet) -- A Sanford Bernstein analyst on Monday put the odds of Sprint (S) going bankrupt in the next five years at 50/50. So, does the bankruptcy metric developed by New York University professor Edward Altman in 1968 -- which has been 72% accurate in predicting corporate bankruptcies two years prior to the filing -- have Bernstein's back?
Sprint is clearly at risk of bankruptcy based on the Altman Z metric, but so is just about every company in its capital intensive sector. Bernstein makes the case that Sprint's bet-the-farm strategy on Apple's (AAPL) iPhone will sink the firm as it tries to build out a network to support the device users' needs.
Sprint does rank most at risk among peers, however, many rank at a score where the bankruptcy risk is closer to Sprint's danger level than what would be an Altman Z "all clear" signal.When it comes to Sprint specifically, there's a key difference between Altman Z and the Bernstein analysis. While Sprint's debt load is high, Bernstein says it should be able to handle its 2013 and 2014 maturities, and that it is after these two years when the real red flags will arise. The Altman Z score, on the other hand, is designed to predict a bankruptcy two years before the event. For a detailed review of Sprint's issues and debt load as portrayed by Bernstein analyst Craig Moffett, click
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