Sprint Shares Take Tumble; Strategy or Churn the Reason?

Sprint's shares on July 28, 2011 suffered their biggest intraday drop since 2008 as its second quarter results missed analyst forecasts, and an unclear 4G strategy, despite firm news of a deal with LightSquared that at least clarifies part of Sprint's Long Term Evolution approach. It isn't entirely clear whether the drop was caused by investor concerns about ongoing churn, or uncertainty about Sprint's long-term strategy.

The future of its relationship with Clearwire, though, remains unsettled. The deal with LightSquared is tactically helpful, assuming LightSquared can mollify the GPS community about interference issues. That is one major issue, but there are others, including the loss of about half its potential spectrum if LightSquared has to avoid using the "L" band frequencies where GPS interference issues exist.

Longer term, some will have questions about the viability of a wholesale-only strategy, as well as ability to raise the rest of the capital needed to finish the full LightSquared network.

Would Sprint kill its Clearwire golden goose?