Sprint Nextel Competitive Analysis, Coursework Example

Introduction and Company Overview

The Sprint Nextel Company is a relatively new bond that appeared in 2005 from the acquisition of Nextel Communications by the company that is titled Nextel. Despite the short period of existence of Sprint Nextel there are many decades of history of both companies that distinguish them in the sphere of US communications and provision of internet services. It is a public company that employs more than 50,000 employees and manages to provide its services of the highest quality for many years not only on the territory of the US but worldwide as well. The company’s headquarters are situated in Kansas and the creation of the company is credited to Clayson Brown (the founder of Sprint) and Morgan O’Brien (the founder of Nextel).

Sprint Nextel appeared relatively not long ago, but it is still necessary to remember that its history and significance in the telecommunications market is still grand despite the fact that these two companies existed separately and achieved their success this way as well. Before the merger both of them constituted the most reliable, popular and widely used internet and telecommunications operators that enjoyed high popularity with the majority of the US population. However, to get a better idea about the Sprint Nextel Company in its contemporary outlook, it is essential to consider more than a century of its activities and existence.

The Sprint Company exists for more than one century and was founded in 1899 when the founder, Clayson Brown, achieved the merger between his Brown Telephone Company and the Bell monopoly in Kansas (Milestone Events Making Sprint History: 1899 – 1989). Since then the company began to develop and adopted a very aggressive strategy of growth and development by which it managed to go much further than the majority of its competitors and come to the fore in the sphere of local telephone provision. However, it was not the end of the independent development of the company – in 1993 it merged with Centel and developed an innovative, extended range of provided services, going farther from only local telephones and providing long-distance calls services as well as wireless telephoning services, which was a real breakthrough for it (Milestone Events Making Sprint History: 1899 – 1989).

The Nextel Company’s development was also vivid and remarkable throughout the end of the 20^th century. It was founded in 1993 and specialized in internet services provision – before that the company was titled Fleet Net. The tempos of growth of the renamed company cannot help arousing excitement:

“In less than year’s time, Nextel merged with Dial Call and OneComm, acquired all of Motorola’s SMR licenses in the U.S., and received a $1 billion investment from wireless pioneer Craig McCaw. By mid-1995, Nextel was on point to serve all of the nation’s top 50 markets” (Milestone Events Making Sprint History: 1899 – 1989).

At the present moment the company after the merger represents a huge provider of all kinds of telephoning and internet services, thus occupying the first place in the US market and constantly expanding the influence further in the world. There are a huge number of the company’s subsidiaries that have also won a good, trusted name and a lot of fame in the eyes of consumers. As a few examples of its subsidiaries one should consider US Unwired, Gulf Coast Wireless, the IWO Holdings or Alamosa PCS (Sprint Nextel Corporation, Google Finance). Besides, it is important to mention the Sprint Partners Alliance – it is a group of companies that work under the name of Sprint and sell their services, but do this under the license of Sprint. They are known as “Sprint Rural Alliance” (SRA) and produce a large share of the company’s revenues.

Surely, the company even being at the fore of the telecommunications and internet connection services may have a set of influential competitors who represent the main threat in the course of market distribution. In the situation of Sprint Nextel, the major competitors who have to be mentioned in the analysis are Verizon Wireless, AT&T Mobility, T-Mobile, U.S. Cellular in the sphere of wireless communications and Line 3 Communications in the international IP communication (Sprint Nextel Corporation, Google Finance).

Among the latest news pertaining to the scope of development and growth of Sprint Nextel posted at its site are several events that are worth consideration in the process of competitive analysis of the company. First of all, the company announced the greater emphasis it is planning to attribute to development of small businesses – its representatives stated that small businesses that undergo the stage of initial development have to realize how important the application of innovative technologies has to be for them and how it can benefit their business, thus allowing them more opportunities and alternatives with their company. Spring Nextel assumed that in this way they are planning to get a major segment of the small business development market, which cannot help them enter a new stage of their development (Sprint Nextel Newsroom).

The second piece of recent news is that Sprint Nextel received the Frost & Sullivan 2009 Award for Product Line Strategy in the North American Mobile Resource Management (MRM) Market. It is a very prestigious award that speaks for itself – it means that the company is firm in the telecommunications market and has no problems or complications both in its internal and in its external environment despite the crisis conditions that have negatively affected all businesses without exclusion (Sprint Nextel Newsroom).

Sprint Nextel Competitive Ratio Analysis

The company seems to be really successful in the US communications market, as it can be seen from the historical overview of establishment and development of the organization. However, some statistical information as well as the benchmarking analysis is necessary to determine the aspects of success in a more accurate and economically precise way. The current key financial information can be seen in the following list:

1. Range 3.31 – 3.34
2. 52 week 1.35 – 5.94
3. Open 3.32
4. Vol / Avg. 3.89M/61.00M
5. Mkt cap 9.35B
6. P/E –
7. Div/yield –
8. EPS -1.02
9. Shares 2.82B
10. Beta 1.12
11. Inst. own 89% (Sprint Nextel Corporation, Thomson One – Business School Edition).

As it comes from the competitors list, the success of the Sprint Nextel Corporation is rather outstanding at the present moment, allowing to speak about the competitive advantage the company received. The most commonly accepted benchmarks according to which the financial analysis is conducted are: valuation (price, change, earnings per share, enterprise value etc.), financial ratios (Lt debt to assets, total debt to assets, debt to equity), operating metrics (return on average assets, return on average equity, return on investment), margins, profile, income statement etc. (Sprint Nextel Corporation, Thomson One – Business School Edition).

When conducting the competitive analysis of the Sprint Nextel and other companies operating in the same sphere, it is possible to analyze the key valuation metrics that can be seen on Figure 1:

Figure 1.

Comp name  Price    Change  Chg %   Earnings per share  P/E ratio   Price-to-book ratio   Price-to-sales ratio      Mkt Cap           Enterprise value

T                   25.53    -0.20         -0.77%              2.02         12.63                      –          1.23         150.63B           218,757.70

CTL               33.10    -0.02         -0.06%              3.22         10.28                      –          3.87           9.84B            12,711.02

CLWR           6.81      -0.24         -3.40%              -2.21                                       –          20.02                        4.93B            9,140.41

DT                14.33    +0.10       0.70% -0.15                                      –          0.63          62.47B            125,769.50

IPCS             23.91     -0.02      -0.08% 0.33         72.72                      –          0.71         401.08M          801.20

PCS              6.73       +0.09      1.36% 0.36         18.53                      –          0.68            2.37B            4,863.33

Q                  3.50       -0.08      -2.23% 0.45         7.81                        –          0.50            6.03B            18,498.19

S                  3.33      +0.08        2.46% -1.02                                      –          0.28             9.38B           25,550.51

TDS              32.53     -0.29        -0.88%              0.65         50.14                      –          0.72            3.55B            5,090.49

VZ                28.83     -0.02      -0.07% 2.12         13.58                      –          0.76           81.89B           185,829.70

VM                4.45      +0.08      1.83% 0.40         11.27                      –          0.24         299.20M          534.54

Note: from Sprint Nextel Corporation, Thomson One – Business School Edition.

Further on the situation with financial ratios shows the position of Sprint Nextel in the list of its competitors forming the market of telecommunications and internet connection in the US. The financial indicators speaking eloquently about the current financial position of several most important companies in the market can be seen on Figure 2:

Figure 2. Financial Ratios of Sprint Nextel and its Major Competitors.

Company name                    Current ratio Lt debt to assets Total debt to assets Lt debt to equity Total debt to equity

S Sprint Nextel Corporation                   1.32                35.10        37.56 104.81                  112.14

T AT&T Inc.                                            0.78                24.73        27.26 66.19                     72.98

VZ Verizon Communications                  0.81                26.43        28.85 139.36                  152.11

DT Deutsche Telekom AG (ADR)           0.70                 32.22        32.22 118.91                  118.91

Q Qwest Communications I…                 1.07                64.46        69.83 –                            –

IPCS iPCS, Inc.                       1.76                85.83        85.84                –                             –

CLWR Clearwire Corporation                 11.90              15.78        15.94 72.64                     73.39

VM Virgin Mobile USA, Inc.                    0.62                71.22        80.17 –                            –

CTL CenturyTel, Inc.                             0.72                36.77        37.02 91.15                     91.77

PCS MetroPCS Communication..           2.21                51.20        51.54 167.26                   168.36

TDS Telephone & Data Syste…             2.43                21.15        21.37 42.45                      42.91

Note: from Sprint Nextel Corporation (Thomson One – Business School Edition).

Continuing the competitive analysis of Sprint Nextel with other companies that successfully function in the market of communications, it is also relevant to have a look at such benchmark as the number of employees who work for the companies analyzed in the present paper. As compared to Sprint Nextel that employs about 56,000 employees one can see that the AT&T Company has about 285,000 employees, Verizon Communications have about 235,000 employees, and Deutsche Telecom AG employs more than 260,000 workers (Sprint Nextel Corporation).

Conclusion and Limitations to the Analysis

It goes without saying that the stressful situation of the world economic crisis played an important role in the formation of the current financial situation at the Sprint Nextel Corporation. However, taking into consideration the success of both companies that previously existed separately and have managed to achieve profound success in their own markets of communications and provision of internet services it becomes possible to say that at the present moment the company’s financial indicators are really beneficial as compared to many other competitors operating in the communications market. The company is still undergoing the process of change and is extending its activities to other markets and spheres of influence, thus risking and taking a chance for success in alternative activities. The way the move forward in their markets allows making a positive forecast for the upcoming years of the company’s activities.

Nonetheless, it is still possible to detect some limitations to the analysis that has been conducted in the present paper. First of all, not all metrics have been taken into consideration – in reality there are many more benchmarks that are taken into account in financial analyses to define the competitive advantage of each separate company. Besides, the unstable economic situation in the world creates unpredictable, changing situation in the market, so the behavior of financial indicators can change abruptly thus spoiling the precision of achieved results and preventing the analysts to make more precise predictions.

Works Cited

Sprint Nextel Corporation, 2009. Google Finance.26 October 2009. <http://www.google.com/finance?q=NYSE:S>

Sprint Nextel Corporation. Thomson One – Business School Edition. South-Western Cengage Learning, 2009.

Sprint Nextel Newsroom, 2009. 26 October 2009. <http://www2.sprint.com/mr/mr home.do>

Milestone Events Making Sprint History: 1899 – 1989, 2009. 26 October 2009. <http://www.sprint.com/companyinfo/history/>