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I am an every day joe just like you. I have recently quit my job so that I can go back to school, and am leaning towards Web Development/Design or Software Engineering as my desired career.

Monday, May 5, 2008

Sprint fighting? or giving in? The Nextel spinoff...

The Wall Street Journal is reporting that Sprint is considering spinning off Nextel. This is hot off of the heels of reports from many places but also WSJ that Deutsch Telekom was considering purchasing Sprint. This is very interesting to say the least. The report is saying that the purchasers would be a group of investment bankers apparently lead by Nextel's founder, Morgan O'Brian. The company would be positioning to be a service for public safety agencies.

The twist to me personally is that the point of the sale is too get rid of an under performing asset and raise capital for reinvestment. This could have a couple of outcomes in mind (or at least in my business mind.) If Dan Hesse really wants to keep Sprint independent from DT, such a maneuver could be to keep them at bay. Hesse does not have the ability to simply turn them down. He answers to the share holders, and if a deal is offered that is too good to be passed up, his hands are tied. After losing a group of partners on the launch of Xohm (wimax), downgrading of their credit rating, and many other hurdles that just seem to keep popping up, one has to wonder will Sprint ever have a chance to get up off of the mat. I personally have felt that Qchat and Wimax were the 2 keys to Sprint's recooperation, but if they can't get the capital to get these going they are of no use. Selling Nextel and making plans on using the capital on moving forward could help to convince shareholders that the future for Sprint is not irreparable.

All that being said, the news about Nextel could also be a move to make Sprint look more lucrative to DT as a potential buyer. With the biggest weakness of the core business out of the way, the value of the company will expand.

I guess we all will have to wait and see because I do not expect information to come rolling quickly on this front.

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