Tuesday, November 16, 2010

“Piper Jaffray boosts Sprint's rating to 'Neutral'”

“Piper Jaffray boosts Sprint's rating to 'Neutral'”

Piper Jaffray boosts Sprint's rating to 'Neutral'

Posted: 16 Nov 2010 11:49 AM PST

On Tuesday November 16, 2010, 2:49 pm EST

NEW YORK (AP) -- Financial analysis firm Piper Jaffray upgraded its rating of Sprint Nextel Corp. to "Neutral" from "Underweight" on Tuesday, saying the cell phone company's third-quarter results suggest it's on its way to repairing its brand image and retaining more customers.

Last month, Sprint, the country's third-largest wireless carrier, reported its first quarterly gain in revenue in three years, although its net loss widened.

In particular, the firm said that Sprint's third-quarter results show it is holding on to more postpaid customers -- that is, people who pay for their monthly service after the fact, an arrangement that ensures they don't have a ceiling on the voice minutes and data use they can enjoy. This differs from people who set limits on their voice and data usage in advance, pledging not to pay for more than that amount of service.

Moreover, the firm is confident that the carrier's disagreement with Clearwire Corp., which makes next-generation, high-speed "4G" technology, will be resolved. Sprint and Clearwire entered arbitration this month in a dispute over wholesale prices for phones that run on both 4G and current-generation 3G networks. Sprint has argued that it shouldn't have to pay premium wholesale prices for 4G phones when some of these devices were registered in areas that only have slower-speed 3G service.

Still, Piper Jaffray says Sprint must realign its cost structure in order for it to fully turn the business and be worthy of the same stock price as larger competitors such as AT&T Inc. and Verizon Communications Inc. The firm said the introduction of the iPhone as well as a resolution to the Clearwire dispute wouldn't hurt.(backslash)

Shares of Sprint Nextel Corp. lost 5 cents to $3.78 in afternoon trading.

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