Sprint Nextel Corporation (S) Rockets; Take Profits Now?

Sprint Nextel Corporation (NYSE:S), the distant No. 3 wireless carrier in the U.S. behind the behemothian duo of AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), at least has shown some spunk in its company dynamic and in its stock price of late, with Wednesday’s close marking a 52-week high (the stock dropped 4 percent Thursday – probably due to profit-taking) and a 12-percent jump in stock price from the beginning of the calendar year.

Sprint Nextel Corporation (NYSE:S)

Yes, for a $5 stock, Sprint Nextel Corporation (NYSE:S) has been a very hot commodity this year. CEO Dan Hesse has said a lot of the right things, and recent quarterly reports have been pretty good – the company added more than $200 million in free cash to its coffers in the most recent quarter and reduced subscriber churn to about 1.7 percent, which is the best in the history of the company.  Plus, the average revenue per postpaid user jumped by more than four dollars to north of $63, also the best level ever for the company.

Plus, Sprint Nextel Corporation (NYSE:S) has been rolling out its 4G LTE network, which should be fully operational by the end of next year. While it is still behind Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) in the timing of the rollout, Sprint does offer it in five major markets and 15 overall – and CEO Hesse has said before that the company is actually ahead of schedule on its rollout. And with reports that Sprint Nextel Corporation (NYSE:S) is retaining 60 percent of its Nextel customers – who are leaving due to Sprint shutting down the Nextel network by the middle of next year – seems to show that there is a real commitment to turning things around at the company.

There is one stock-watcher who wrote about his general respect and impress at the work Sprint Nextel Corporation (NYSE:S) has done in the last year, but he also gives some reasons to consider taking profits on the stock if investors bought when it was under $2.50 a share. One of the negative factors has been the company’s “low-cost” strategy, which includes its “unlimited” data plan. While this would certain make Sprint different from Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (ANYSE:T), it does severely limit profit margins for the company, and that is where Sprint has been pinched. Secondly, Sprint has to pay for nearly 31 million iPhones from Apple Inc. (NASDAQ:AAPL) through 2013, which means it may have to grab larger market share in a down economy in order to move all that inventory without getting bitten. Plus, the company is having to spend big advertising dollars to keep ace with Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) – and will likely then need better ROI to make it pay off.

Generally, one stock-watcher believes it’s time to take some profits now, and get back in later when the stock is still at a discount. What do you say about Sprint Nextel Corporation (NYSE:S): Are you buying, or selling? That is a good question for some hedge fund managers who are currently invested, like David Einhorn of Greenlight Capital, who had $195 million stake in the first quarter of this year.

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