Sprint to rebuild, restructure or be acquired?

Long-distance service providers AT&T Corp. and WorldCom Inc. have walked down the reorganization road in recent days. Another major player in the consumer long distance service arena, Sprint Corp. is slated to hold its annual investment community meeting on Friday and to give a glimpse at its future.

Analysts have mixed views whether the telecommunications giant will announce plans to rebuild, restructure or look to be acquired.

Sprint spokesman Mark Bonavia had no comment Thursday. Sprint, along with AT&T and WorldCom, is faced with greater competition and competitive pricing in the consumer long distance market.

Like WorldCom, though, Sprint has had to rebound from their marriage attempt that fell apart in July.

“Since the demise of deal with Worldcom, Sprint has gone back to Kansas City (Mo.) and dusted itself off,” said Jeanne Schaaf, a senior analyst with Forrester Research Inc. “This (Friday’s meeting) is going to be the answers to that. What my gut tells me is that Sprint is not going to do a restructuring. They are going to tell us how they are going to move forward on all fronts. I see a pretty aggressive strategy for all their businesses.”

The failed merger distracted Sprint and caused the company to lose momentum, said Jeff Kagan, a telecom industry analyst in Marietta, Ga.

“Now that the merger is off, they find themselves in a weakened position,” Kagan said.

“They lost their market position,” he added. “They have lost a lot of senior executives. They, like Worldcom and AT&T, are at a strategic inflection point. They have to decide if they are going to be acquired or rebuild and regain momentum. I think they are going to rebuild. The question is if they are going to follow AT&T and Worldcom in creating a tracking stock. Sprint is still a strong company with happy customers and good momentum. They lost the fire in the belly and they need to regain it.”

Sprint already has a tracking stock, which is PCS or the wireless unit of the company. It began trading separate from the company’s wireline unit, which trades under the symbol FON, in 1998.

Dan Reingold, an analyst with Credit Suisse First Boston Corp., on Thursday said in a statement that Sprint continues to remain a takeover candidate for companies such as Qwest Communications International Inc. and Bell South Corp. Sprint has seen its FON unit’s stock fall from a closing price of US$59.93 a share on June 1 to $23 a share on Nov. 1. Sprint’s Wireless PCS stock has gone from a closing price of $55 a share on June 1 and closed on Nov. 1 at $37 a share.

Sprint’s annual investment community meeting will be aired on a audio-only Web cast beginning at 8 a.m. EST and conclude at 3:30 p.m. EST on Friday. The meeting will feature presentations relative to the FON Group in the morning and the PCS Group in the afternoon. Listeners will be able to view presentations made at the meeting while listening.

Sprint, in Westwood, Kansas, can be reached at http://www.sprint.com/.

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