Thursday, February 10, 2011

Sprint (NYSE:S) Needs to Increase Capex to Compete Against AT&T (NYSE:T), Verizon (NYSE:VZ)

One of the major problems a company under competitive pressure has is in relationship to spending versus revenue, as in the case of Sprint (NYSE:S) when competing against larger rivals Verizon (NYSE:VZ) and AT&T (NYSE:T).

Sprint has been taking some important steps to stem the losses of subscribers, especially with its CDMA platform, which may point to them transferring customers from iDEN to CDMA in order to slow down the losses as well.

The problem for Sprint is it'll take capital to successfully implement the strategy, and when expenditure is measured against revenues, they're falling behind their competitors as measured by percentages.

It's easy to understand their need to curb costs during the worst of the recession, but to grow the company, they're going to have to loosen up the purse strings going forward, although obviously in an efficient manner.

Sprint closed Wednesday at $4.35, gaining $0.04, or 0.93 percent. AT&T ended the session at $27.97, up $0.06, or 0.21 percent. Verizon closed at $36.68, up $0.34, or 0.94 percent.

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