Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

DISH Network Corp. (DISH) Is Throwing Its Money Away

In addition, Dish is not equipped to absorb these large losses.

Dish 2012 2011 2010 2009 2008
Net Income (millions $) 637 1,516 985 636 903
Stockholders’ Equity (millions $) 72 -419 -1,133 -2,092 -1,949

From 2008 to 2012, Dish’s largest net income was $1.5 billion. Sprint’s smallest loss was $2.4 billion. Simple math dictates that the merger would result in an unprofitable company. Also, Dish’s equity is only $72 million. Thus, Dish’s investment cost will likely be much higher than $25.5 billion because it will have to find a way to rapidly turn Sprint’s business around. This means restructuring charges. Furthermore, a turnaround usually takes a few years to work, so a Dish Sprint combo will likely bleed money for at least a few quarters.

Also, while spectrum holdings are valuable, owning more spectrum rights does not make a company automatically more profitable. Just look at Clearwire Corporation (NASDAQ:CLWR), which owns more spectrum than AT&T or Verizon Communications Inc. (NYSE:VZ), but has been losing money for years. Also, Dish already provides content on the go with its DISH Network Corp. (NASDAQ:DISH) Anywhere service. Thus, Dish is gambling that bundling its services with Sprint will bring in more subscribers. There are other places for consumers to get content so this a risky bet. Overall, while a Dish/Sprint merger would have some good assets, this proposed merger has the potential to turn into an ugly mess and is not worth the risk.

Alvin Gonzales has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.