Sprint stumbles. Shares of Sprint slid on Monday after at least six analysts downgraded the stock due to liquidity concerns in the wake of a company conference with investors and analysts held on Friday. At the conference, management announced plans for a costly network upgrade which may require the company to hit the market to raise additional cash. Sprint plans to go it alone in constructive a high-speed wireless network based on a standard used by rivals AT&T (T) and Verizon (VZ), a plan which would distance itself from 4G provider Clearwire (CLWR), whose shares also tumbled on Monday.
Additionally, the company will face rising costs as it begins to subsidize sales of the newest version of Apple’s iPhone. CFO Joseph Euteneur told investors at the conference that the company would look at reducing its $4.3-billion cash balance, tap its $900-million credit facility or go to the market to help cover costs.
One analyst speculates that the company may need to raise as much as $3.5 billion by the end of 2013 to fund the network expansion as well as the iPhone subsidies. Sprint has committed to purchasing 30.5 million iPhones over the next four years, a commitment worth as much as $20 billion according to people familiar with the company’s plans.
Sprint Nextel (S : NYSE : US$2.22), Net Change: -0.19, % Change: -7.88%, Volume: 305,382,597