​Jeff Kagan: Sprint Recovery On Track

Jeff Kagan |

Sprint released their quarterly numbers this week and everyone took a sigh of relief. Their transformation and recovery seem to be on track. Their quarterly loss was lower than expected. They are reducing costs and are redesigning the company going forward. While there is still much ground to be covered and while I cannot tell you what the future will bring, today Sprint looks much better than one year ago.

To tell you the truth, with all the noise and chaos in the industry, this looks a little like childbirth. You know, a lot of screaming, plenty of distraction and pain during the delivery process, but if all goes well, in the end you have a beautiful new baby. Sprint is in the middle of this multi-year recovery process.

However, the screaming doesn’t seem to be coming from Sprint. Rather it is coming from some in the marketplace who don’t understand what is happening. So let’s take a moment and pull the camera back and take a look from a longer-term perspective at Sprint and their journey.

Sprint in Middle of Multi-Year Transformation

It’s important to remember Sprint is in the middle of a major reinvention. The Sprint of yesterday is disappearing and is being replace by the Sprint of tomorrow. We knew what was going to happen when they started this journey a year or so ago. If that’s the case, why is there so much noise confusing the marketplace now?

Let’s remember, this story started a few years ago when Sprint was in financial difficulty. It began with the Softbank acquisition. Then a little over a year ago they got a new CEO. They have been hiring executives and rearranging the executive branch ever since. The Sprint of today looks nothing like the Sprint of yesterday.

I saw CEO Marcelo Claure tell CBNC yesterday of the achievements and awards the company has achieved during this last year. And there have been many. After an extended dry period, let’s consider the success that Sprint has seen during the last year.

Several marketing plans like their half off deals have both won and retained market share. Now the Sprint LTE Plus Network is speeding up performance. This has expanded from from 77 to 150 markets with more to come. They have won recognition and awards from Nielsen and RootMetrics. Sprint is also in a dramatic cost cutting mode. All that is good news.

Going forward the wireless industry will be splitting into segments. One segment will be AT&T and Verizon offering an assortment of wireless, wire line, Internet, television through Uverse and FiOS IPTV and DirecTV. Another segment is wireless only where Sprint and T-Mobile will compete. This is a healthy sector, but different. Another segment is where smaller or more regional carriers will compete like US Cellular and C Spire Wireless. And there is a Then there is a new segment in the MNVO space with Google Project Fi, and quite possibly Microsoft and others.

So wireless companies must be looked at differently going forward. They must be compared with a smaller group of companies in their similar sector. That’s the world that I believe Sprint is transforming to become a healthy player in.

Bottom Line About Sprint Current Position

With regards to Sprint performance, so far, so good. I have seen nothing that points to trouble. They are in the middle of a reorganization. The same kind of reorganization we have seen at other companies over the years. Sure there will be pain like job losses and cost cutting, but as a company they are making the right long-term moves to regain growth once again.

We don’t yet know what Sprint will look like next year or a few years out. However if they stay on the current path things do look good. A new wireless company in a changed wireless industry. Hopefully they will continue to improve as they have so far.

However we must remember that Sprint is in the middle of a multi-year transformation. The current quarterly numbers show improvement. And isn’t that the bottom line? There are no long term guarantees, but if they can keep this up the company will be a larger and stronger competitor going forward. They seem to be heading in the right direction. Let’s keep our eyes on them going forward, but so far, so good.

Equities.com columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst and consultant. He shares thoughts on the changing industry, which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next. Email him at jeff@jeffKAGAN.com.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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