More than a pin drop

Today, Sprint finally announced its $100/month “all you can eat” plan. It’s been experimenting with it in selected markets for nearly a year, and finally decided to roll it out nationwide.

And there’s the rub — two weeks ago, it would have lead the industry, but since the #1, #2 and #4 carriers unveiled unlimited plans last week, Sprint’s effort is now a “me too” response to the commoditization of cellphone service. To get any attention at all, they had to sweeten the pot with unlimited data, text, e-mail, Internet access, push-to-talk and everything else.

This is but one small example of the problems facing the gang that hasn’t been able to shot straight since it bought Nextel nearly three years ago. I’ve been a loyal Sprint customer for nearly a decade, but that loyalty is being sorely tested. Sprint is hemorrhaging customers while its competitors continue to gain.

As a WSJ blogger noted, the Nextel purchase is now officially a “deal from hell.” The two companies each had a market cap of $33b, and now that $66b is worth $25b. Today, Sprint officially wrote off $29.5b of the $35b acquisition cost— which might imply that it overpaid by 6x, but really means that the value of the combined companies — with two technologies, headquarters, cultures and subscriber bases — was less than the constituent parts.

Newly-appointed Sprint CEO (and former AT&T Wireless head) Dan Hesse is facing a multitude of problems, beyond the massive losses, customer defections, technology problems and junk bond credit ratings. It has mediocre phones and poor service, while its Nextel cash cow of loyal small business customers has been milked nearly to death.

Its 4G strategy was supposed to be WiMax partnering with Clearwire. One problem is that the economics of WiMax (as a stand-alone business) have always been dubious. Another is that Sprint doesn’t have the money, which is probably why Sprint cancelled its commitment to Clearwire in November.

Rumor has it that negotiations have reopened, with efforts to get funding from Google, and some are suggesting that Sprint spin off the WiMax efforts. But without a 4G network, Sprint would truly be en route to a controlled flight into terrain (or waiting for someone to buy them for their spectrum value).

The cultural and organizational issues can be fixed, so it’s shocking that they have dragged on so long. (Even Carly Fiorina could figure that out). In the short term, Sprint certainly can get cool phones if it wants to — maybe no iPhone, but there’s plenty of good CDMA phones available from LG or Samsung.

Is it time to bottom fish on Sprint stock? I'm not much of a stock picker — and the options market say the worse is yet to come. But some speculate that the market value of Sprint’s spectrum is greater than the entire company — assuming you can find a well-heeled enough buyer. With a market cap of $15b, Sprint MVNO customer SK Telecom could afford Sprint, but they may decide they don’t need any more exposure to commodity markets.