Since my last article urging readers to buy Sprint (S), the company delivered blowout second-quarter results on July 26. Among other positives, revenues increased 6%, despite the continued shutdown of the Nextel platform (Sprint platform revenues increased 16%), Sprint platform post-paid churn hit a record low of 1.69%, and ARPU hit a record high of $63.38. Apple (AAPL) iPhone sales held up much better than they did for Verizon (VZ) and AT&T (T), and adjusted OIBDA guidance for 2012 was increased from around $3.9 billion to $4.5 billion to $4.6 billion.

In light of these results, shares have increased 48% (as of Tuesday’s market close), prompting calls from many that the run-up has been overdone. While such a reaction of caution is natural, following a large share price increase over a short period of time, I believe that the share price reaction has actually been too limited.

Putting recent Gains into Perspective

While Sprint’s share price has gone up 48%, a lot of that increase is attributable to Sprint’s high gearing (net debt/total capitalization) — largely because of the company’s previously depressed share price/market capitalization — and the resultant leveraging effect of an appreciating asset.

To illustrate with an example, assume you buy a $100,000 home with 20% down and 80% financed through a mortgage. a year later, if your home price goes up 10%, your home is worth $110,000 and your equity value has increased 50% (from $20,000 to $30,000). In such an example, you would typically equate your home price appreciation with the change in your home’s value and not the return on your equity. While this intuitively and logically makes sense, many in the stock market simplistically focus on stock price appreciation over enterprise value.

With respect to Sprint, the share price has increased 48%; however, incorporating net debt and the total enterprise value, the company’s value has only increased 20%. furthermore, if you back out the 5% market appreciation (using the S&P 500 as a proxy) over the same period, Sprint’s EV outperformance over the equity market, since results, is only 15%. To put that in perspective, with the results, year-end adjusted OIBDA guidance was increased 17% (assuming the top-end of previous guidance and mid-range of the new guidance), so Sprint’s enterprise value hasn’t even outperformed commensurately with the improved guidance for this year.

Closing share priceSprintS&P 500July 25th (close before earning’s day):3.371,337.89Aug. 14th:4.991,403.93Change:48.1%4.9%Over(under)performance43.1%July 25thAug. 14thChange% ChangeSprint’s Net Debt:14,502.014,502.0–Sprint’s Market Cap:10,120.014,990.04,870.048.1%Sprint’s EV:24,622.029,492.04,870.019.8%Over/underperformance:14.8%Source: Company reports and Yahoo FinanceRounding differences may occur.

What’s so attractive about Sprint’s leveraging effect is the fact that it was largely due to the depressed equity/market capitalization rather than over-leverage. as I addressed in my most recent article on Sprint (linked to above) and despite many claims to the contrary, I believe that Sprint’s debt levels are very manageable — providing a catalyst for further share appreciation with only moderate associated risks.

Sprint’s Valuation Remains Attractive

While Sprint’s recent run-up seems dramatic, also bear in mind that the share price remains over 73% below its five-year high and substantially lower than its peers. Consider that AT&T — which basically offers the same wireless product and services across the same geographies — trades at an enterprise valuation of over 9 times that of Sprint (and a market cap of over 14 times) . Not that I expect total convergence (and AT&T does have a substantial fixed-line business to consider), but nothing even remotely close to that is required in order for Sprint to double — and I do expect some convergence.

Click to enlarge image.

Why some Convergence seems Likely

With a level playing field for products and services (as is essentially now the case with Sprint, Verizon, and AT&T ), maintaining high market share for the big players can prove very difficult. Constant customer churn (which is inherently high in the cell phone industry) means that the big guys have to maintain a disproportionately higher number of gross adds (or much lower churn levels) in order to maintain their higher market shares. Long term, that’s a tough task for these bigger operators when they no longer have a better product offering (and have arguably had worse service). for that reason, I continue to expect the market share numbers for the big three operators to gradually converge over time.

Furthermore, I also expect margins among the three major operators to converge. Sprint has a detailed plan in place to improve its margins and I see no logical reason why Sprint’s margins won’t migrate toward the levels of its competitors over time. By 2014, Sprint’s management expects a 400 to 600 basis point margin improvement from "network vision" initiatives and an additional 400 to 600 basis point improvement from other operational improvements, which would give Sprint 800 to 1,200 basis points in total margin expansion.

Conclusion

Sprint’s shares have had a nice run-up recently; however, I believe that there is much more upside to come. While the company’s recent share price appreciation has been substantial and rapid, much of it was due to a leveraging effect. taking that into consideration, as well as the oversold levels where the shares began, I believe that the stock remains substantially undervalued. I continue to view Sprint as one of the most attractive risk/reward opportunities in the market today.

Disclosure: I am long S, AAPL.

Sprint Remains Substantially Undervalued – Seeking Alpha

By JENNA FRYERAP Auto Racing Writer

CONCORD, N.C. (AP) – It's not often a race car driver intentionally cruises slowly at the back of the field.

Jimmie Johnson did it for roughly 60 laps Saturday night, and it earned him a cool $1 million payday.

Johnson used a calculated strategy – he drove hard for the first and last segments, and coasted for the three in between – to join Dale Earnhardt and Jeff Gordon as the only three-time winners of NASCAR's All-Star race.

The five-time champion won the first 20-lap segment of the Sprint All-Star race, then deliberately faded to the back for the next three 20-lap segments at Charlotte Motor Speedway. his plan was to keep the no. 48 Chevrolet out of trouble, then make his play for the win in the fifth and final segment.

“We did a strategy that we thought was best for our team,” he said.

It certainly was, even if it was the antithesis of what race car drivers do for a living.

But it worked for this year's new format, which guaranteed the winners of the first four segments would be the first four drivers down pit road for a mandatory stop before the 10-lap sprint to the finish. Johnson's win in the first segment meant he was guaranteed to be the first driver down pit road, and he had the first stall – the reward for his Hendrick Motorsports team winning Thursday night's Pit Crew Competition.

His race, after winning that first segment, was simply to beat everyone else off pit road. Johnson raced Matt Kenseth down the lane, and edged him across the line.

He then needed a clean and quick restart, which he executed to perfection, to pull away for the win. This win comes a week after his Darlington Raceway victory gave Hendrick Motorsports its 200th Cup win.

“Man, I don't want this week to end,” Johnson said.

He celebrated by picking up team owner Rick Hendrick, who climbed halfway through the window of the Chevrolet for Johnson's celebratory lap. It was Hendrick's seventh All-Star race win.

“He said come pick me up, and once I got to him, he didn't want the ride,” Johnson said. “I'm like, 'no, no, I came to get you, get on the car.' It was great to take him around.”

It didn't look very comfortable – or safe.

“That was the dumbest thing I've ever done in racing,” Hendrick said. “I thought I was going to be a busted watermelon.”

Brad Keselowski, winner of the third segment, had no chance to catch Johnson over the closing 10 laps. The final segment was the shortest by 10 laps, but Keselowski didn't think it mattered.

“I don't think it was going to make a difference if it was a hundred laps at the end; Jimmie was just that fast,” Keselowski said. “You can't really steal any of his thunder on that. I was doing all I could to get by, but wasn't meant to be.”

But Keselowski, who won the third segment, wasn't all that disappointed.

“It's all about the restart,” Keselowski said. “The high line on the restart just wouldn't go. I don't know if I would have been able to do anything, but I would have liked another shot. we got beat by a five-time champ and two-time All-Star winner, so I think we're doing pretty good. we didn't have enough to pull it off.”

Kenseth, winner of the second segment, finished third. He had some tense moments after teammates Carl Edwards and Greg Biffle had engine failures – Biffle's exploded into a giant fireball – and initially wasn't all that comfortable following Johnson's lead of running around the back until the final 10 laps.

“I watched what the 48 did. they won the first one, so they didn't race until the last 10,” Kenseth said. “They seem to know what they're doing, pretty smart. we watched that, kind of hung back. There wasn't any reward for racing up through there. you knew you were coming on pit road second.”

And after losing the race off pit road to Johnson, and the restart, too, Kenseth knew he couldn't catch the winner. It was Kenseth's fifth top-five finish in 12 All-Star races.

“For me, you got somebody as fast as him out front, there was no way I was going to have a shot in 10 laps,” Kenseth said. “Ten laps is kind of short, but yet the fastest car was out front. It was hard to beat that.”

Kyle Busch finished fourth and was followed by Dale Earnhardt Jr., who won the fourth segment and advanced into the All-Star race by winning the qualifying race earlier Saturday night. Busch, the pole-sitter, wasn't surprised by the finishing order.

“It was exactly like everybody thought it would be; Anybody who wins the first segment will win the race,” Busch said.

Copyright 2012 The associated Press. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.

WSET.com – ABC13Johnson cruises to 3rd win in NASCAR All-Star race

When Apple failed to release a full-blown, redesigned version of its iconic iPhone last October, many industry watchers predicted it to be only a moderate success. Boy, were they wrong.

Backed by the introduction of Siri – the voice-recognition software – the iPhone 4S shattered Apple’s own smartphone sales records, thus becoming the hottest selling device of all time, still topping all other phones in monthly sales at AT&T, Verizon Wireless and Sprint.

So when Apple delivers what is presumed to be its first iPhone (iPhone 5, sixth-gen iPhone, next iPhone, whatever you want to call it) compatible with speedy LTE wireless networks later this year – be it summer or fall – it would be no surprise if the Silicon Valley giant topped its own marks again. And today there is some evidence to back up that forecast.

PCWorld/Macworld did a survey that found a whole lot of people are planning to buy or upgrade to Apple’s next smartphone – with 4G LTE being at the top of their list of reasons why. Seven in 10 MacWorld readers obsessed with Apple gadgets said they would get one; almost half of those said they wouldn’t wait for it to show up in stores – they’ll preorder it. only 15 percent of the PCWorld readers were on board – natch – but blend the two together along with a sample of people polled who don’t read either publication, and you still get about 40 percent who say they’ll plunk down $200, $300 or $400 for a sixth-generation iPhone.

AT&T was a winner in the survey. About four in 10 respondents said they would choose the Dallas-based carrier for their iPhone, compared to three in 10 who picked Verizon Wireless.

Many so-called industry experts predicted Apple would include LTE functionality in last year’s iPhone, but almost no one is betting against it this year since the company’s third-generation iPad, released in March, is LTE-compatible.

LTE iPhone 5 Potentially Apple’s Best Seller to Date

I noticed a problem with the sprint website which i would like to report. when you are on the shop page / phones tab, if you check the pre-owned filter box it will instantly filter all the phones and only show you the ones which are preowned. Click on one of the phones to see the device details (f.e. lg optimus preowned). Afterwards, click the “back” key in your browser (i’m using chrome) which will take you back to the page with all the phones.

Notice how your “pre-owned” filter box is still checked, but the website it’s showing ALL the devices not only the pre-owned ones. This creates confusion as untrained users will believe that all the devices are preowned.

The functionality of the filter box should be adjusted.

Thanks,

Sprint Community: Phone filter drops functionality

This post is sponsored by Sprint.

Aaron unboxes and does a quick review of the Sprint Samsung Galaxy Nexus.  Barring some minor design changes like darker chrome and a different battery door, the Galaxy Nexus packs the same features as the Verizon version, including a 1.2 GHz dual-core TI OMAP processor, 4.65-inch Super AMOLED HD (720p) display with PenTile technology, 5-megapixel camera with 1080p HD video recording, 4G LTE (once Sprint rolls it out), Android 4.0 (Ice Cream Sandwich), and a 1,850 mAh battery.  it goes above and beyond by offering Google Wallet and Google Shopper.  It’s available now for $199.99 with a two-year agreement.

Sprint Samsung Galaxy Nexus Unboxing

Sprint plans to announce its Q1 2012 earnings on Wednesday, April 25th. we will be closely watching the company’s net postpaid subscriber additions for the quarter as well as the postpaid churn numbers to see if the management is making good on its iPhone plans.

The iPhone’s debut quarter at Sprint was a good one as the smartphone helped it post a net postpaid subscriber gain for the first time last year. That move, however, took a heavy toll on margins as the company posted its largest quarterly loss in three years. Sprint started offering the iPhone on its network at the start of the fourth quarter last year becoming the third carrier in the U.S. to offer the device after AT&T and Verizon.

With the holiday quarter behind us, we expect to see Sprint’s margins improve but it will be interesting to see how it manages balancing margin pressures with postpaid adds going forward.

See our full analysis of Sprint’s stock here

The iPhone conundrum

Sprint has been incurring heavy annual postpaid subscriber losses for a long time now, and its decision to carry the iPhone came as a solution to that problem. however, since Sprint was a tad late in jumping on the iPhone bandwagon, it had to make a huge upfront commitment of nearly $15.5 billion for the iPhone over a four-year period. This was a massive bet considering that the company already has a highly leveraged balance sheet, with about $26 billion in debt on its books compared to a market capitalization of only around $7.5 billion.

However, the wager seemed to have paid off as Sprint added 161,00o net postpaid subscribers last quarter. however the figure was lower than what Sprint had guided for at the start of the quarter. we will therefore be looking for any signs that management may have been overly optimistic with the iPhone deal or not, while taking into account that a majority of the postpaid churn will still come from Nextel’s legacy iDen network as it is gradually decommissioned.

Margin recovery

Although the iPhone helped Sprint post a net gain in postpaid subscribers, 40% of whom were new to Sprint’s network, the 1.8 million iPhones Sprint had to subsidize in the process cost it almost $630 million, or about $350 per phone. This brought the company’s OIBDA margins down by more than 700 basis points (7%) compared to the previous quarter. we expect to see a seasonal slowdown in smartphone sales compared to the holiday quarter, so margins should recover somewhat from the last quarter’s shock.

Also, the higher data ARPUs that the added smartphone customers will generate over the life of their contractual period (two years) should help margins in the long term.

LTE update

With Verizon and AT&T far ahead in the LTE race, we will be expecting an update on Sprint’s LTE plans. Verizon’s LTE network covers about 200 million Americans currently and AT&T’s about 75 million. Sprint needs its LTE network up and running in at least a few key cities before the iPhone 5 launches (which we expect will be LTE-compatible), otherwise it runs the risk of losing a lot of new potential customers to its rivals. (see Sprint’s LTE Plans are Coming up Short as iPhone 5 Approaches)

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Sprint Could Spring To $3.60 If iPhone Bet Pays Off

You should consider following three key elements if you want to have a fruitful Spring planning meeting.

1. Preparation
2. Negotiation
3. Mechanics

1. Preparation

Well, the preparation occurs ahead of the planning. however, it is of paramount importance.

Product Backlog grooming is the main ingredient of the preparation. the Product Backlog grooming helps the Team and the Product owner to

• Get a solid understanding of the Product Backlog items, especially ones at the top.
• Save valuable time in the Sprint planning meeting. they can avoid long and often times painful discussions.
• Understand and prepare for the resource requirements

The Sprint planning is a time-boxed meeting.the Team needs to discuss, understand and agree on the Sprint Goal within this time-box. it needs to devise an initial Sprint Backlog. the Scrum Team will find it hard to wrap up the discussion if it doesn’t prepare well. it will struggle to agree on the scope of the Sprint.

This potentially can ruin the whole Sprint.

2. Negotiation

The Product Owner wants certain Product Backlog items completed during the next Sprint. She want to ensure that the project remains on track. the Product Owner puts her ideas and requirements forward during the Sprint Sprint.

But, this is the start of the discussion between the Team and the Product Owner. they negotiate on the items and the Sprint scope. the Team members ask questions to clarify the scope of the items. they want to reduce ambiguity.

Many times the Team finds out that

• The Product Backlog Items proposed by the Product Owner will require more work than the Team can do within a single Sprint
• The Team will need to do additional work to deliver items required by the Product Owner. this stems from technical, design, and feature dependencies.

So the Scrum Team negotiates the scope and many times the order of the Product Backlog Items. it adds more information to a few items. it reduces the scope of certain items to enable the Team to complete them in a Sprint. this is the negotiation that occurs during the course of a Sprint planning.

3. Mechanics

Sprint planning meeting is a critical meeting. So the whole Scrum Team participates in the meeting. this means the Scrum Master, the Product Owner and the (Development) Team. the Scrum Master facilitates this meeting.

• The amount of work it can deliver in a Sprint, called Velocity
• Planned vacations etc. calculate Team capacity and availability for the Sprint

The Scrum Master facilitates this meeting. Sprint planning consists of two logical parts.

I: the Team and the Product Owner discuss and agree on the scope of the Product Backlog Items aimed for the Sprint. Then they agree on a Sprint Goal. the Team refines (or defines if they have just started the project) the Definition of Done. this is the what part. they have agreed on what needs to be done.

II: the Team creates a plan to deliver the selected work, the Sprint Backlog. this is the how part. the Team usually breaks down the selected items into small tasks.

And the Sprint gets going.

Three Key Aspects of a Sprint Planning Meeting

Schneiderman's lawsuit is the first filed under the New York false Claims Act, which allows the government to sue over tax losses stemming from fraud. Since companies or individuals found liable of defrauding the government are charged triple the damages, penalties and attorneys' fees, Sprint could end up paying more than $300 million.

“The message of our office is clear – tax dodging is not acceptable and we will use every tool in our arsenal to make sure that taxpayers' money is protected, and that honest businesses and consumers are not placed at a disadvantage for collecting and paying their fair share of taxes,” Schneiderman said. 

The New York Tax Law, enacted in 2002, requires cell service providers to collect and pay sales taxes based on the full amount of monthly access charges for their individual calling plans. for example, if a customer pays Sprint $39.99 a month for 450 minutes of calling time, the New York Tax Law states Sprint must collect and pay sales taxes on the $39.99.

Schneiderman asserts that since 2005, Sprint has failed to collect and pay these taxes “on an arbitrarily set portion of its revenue” by “repeatedly and knowingly” submitting false reports and statements to New York's tax authorities. the Attorney General accuses Sprint of hiding this practice in an attempt to lure customers away from competitors like Verizon Wireless and AT&T.

If the Attorney General's statements are true, Sprint effectively made its service more than $4.6 million less expensive per month. yet, Schneiderman asserts that this illegality is ongoing.

“Sprint did not correct its sales tax practices when it was informed of its illegality, and it has not corrected them even today,” he said. “As a result of Sprint's unlawful actions, its underpayment of New York sales taxes is growing by about a $210,000 every week, over $30,000 a day.”

The Attorney General's investigation of Sprint reportedly began last March, when the New York State Department of Taxation and Finance investigated and determined the extent of Sprint's illegal actions. the Attorney General hopes to connect the bills Sprint was accused of not paying, and also looks to “protect Sprint's current customers to whom Sprint falsely marketed its wireless calling plans.”

“Sprint promised its customers that it would collect and pay the correct amount of sales taxes on their behalf,” said the Attorney General's office. “The Attorney General seeks to ensure that Sprint — and not its customers — will be liable for any back taxes, and to empower Sprint's current New York customers to terminate their Sprint contracts without having to pay termination fees.”

Attorney General Schneiderman and his staff will work with Menz Bonner Komar & Koenigsberg LLP to investigate the claims and handle the matter in court.

“This case shows that the New York Attorney General is putting to good use the tools provided by the robust New York false Claims Act that Attorney General Schneiderman expanded as a lawmaker,” said David Koenigsberg of the law firm. “We look forward to working with his office to pursue this case in court.”

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Sprint Sued By New York For $300 Million; Service Provider Denies Tax Fraud

It looks like the Samsung Galaxy Note is headed to US mobile carrier Sprint, as the guys from TechnoBuffalo spotted a device on Sprint’s website which looks remarkably similar to the Samsung Galaxy Note.

You can see the device in the second photo below, Samsung and Sprint have yet to announce that the Galaxy Note will be available on Sprint, although we have heard rumors in the past that the handset may be headed to Sprint.

As soon as we get some more information on when and if the Samsung Galaxy Note is headed to Sprint in the US we will let you guys know.

Source TechnoBuffalo

.

Samsung Galaxy Note Headed To Sprint?

Ting debuted back at the beginning of February as an MVNO that utilizes Sprint’s 3G network to offer customizable plans, and the carrier recently made a big announcement concerning its plans for 4G on its official blog. The company says that it will offer 4G LTE service once Sprint’s upcoming LTE network goes live, which is expected to happen by the middle of this year. The same markets that’ll be receiving Sprint LTE coverage, which so far includes Atlanta, Baltimore, Dallas, Kansas City, Houston and San Antonio, will also have LTE coverage for Ting customers. as for which LTE devices Ting will have on offer, the company says that it’s got several products in the pipeline, including USB sticks, mobile hotspots and “some pretty spiffy smartphones.”

Ting allows customers a unique way to select their plan, giving users several different options for voice minutes, messages and data and letting them pick the amount that they need. Customers can be bumped up if they use more minutes or data than the bucket they selected, but they can also receive a credit if they use less than anticipated. It’s good to hear that Ting will be taking advantage of Sprint’s LTE network, and it’ll be interesting to see what kinds of LTE devices it’s got up its sleeve. have any of you signed up for Ting since it debuted?

Via Fierce Wireless, Ting

Ting to offer 4G LTE service once Sprint’s network goes live