Last time this happened, stocks tanked

Mega-mergers are grabbing the headlines this week, but are they signaling a top in stocks?

According to data compiled by Thomson Reuters, roughly $1.5 trillion (that's with a "t") in merger transactions involving U.S.-based companies have been done since the start of 2014. That's the most since the tech bubble days of 2000.

And we all know what happened then.

With the S&P 500 now at all-time highs, some investors may be worried that a repeat of the market crashes of 2000 – or 2007 – may be in our sights. But one top trader says this time is different.

(Watch: S&P, Dow end at record highs as global worries ease)

"It's not a top," said David Seaburg, head of sales trading at Cowen and Company. "It's a very positive setup for a continuation of the secular bull market."

Unlike a decade ago, the recent crop of mergers and acquisitions has been mostly strategic, Seaburg said. "You don't have these venture firms … or private equity coming and taking companies at very high valuations."

He believes the driver for M&A activity has been a need for growth after companies cut their expenses as much as they could. Now they are using cheap money to buy more growth.

"Earnings growth over the past several years predicated on cost-cutting and stock buybacks," Seaburg said. "We're starting to see a turn…. Growth is on the horizon. CEOs are seeing it. They can't grow organically; it takes way too long. Strategic M&A is important in order to grow."

"It's going to continue to make this market and push it to trend higher," he added.

View gallery

.

The charts on the S&P 500 also show why these days are different from 2000 and 2007, according to a leading technical analyst.

(Watch: Cashin: Why record highs are frustrating traders)

"It is a much more bullish setup now than it was then," said Ari Wald, head of technical analysis at Oppenheimer & Co., looking at an 85-year chart of the S&P 500. "We see this as a secular bull market. We've pushed above those 2000 and 2007 peaks."

Momentum is also on the side of a higher market when looking at a chart of the 10-year rate of change in the S&P 500 going back to 1936.

View gallery

.

"Back in 2000, the 10-year rate of change was around 300 percent,"  Wald noted. "In 2007, it was at a lower level but it was still falling. Now we're still at a low level, but we're inflecting positively. This is a great setup here. This is much similar to the points in the 1950s and 1980s that led to these multiyear rallies."

Wald believes the markets will continue to make higher highs and higher lows. "U.S. stocks are the place to be," he said.

• Finance
• Investment & Company Information

Sprint’s CEO Shakes Up Executive Ranks, Chief Marketing Officer to Leave

Nov. 17, 2014 6:22 p.m. ET

Sprint
Corp.

's new Chief Executive

Marcelo Claure

is shuffling top executives as he tries to turn around the nation's struggling, third-place wireless carrier.

"It's often said that the people are the greatest asset of a company. I disagree," Mr. Claure wrote in the memo distributed to Sprint employees last week. "The right people are the most important asset."

In the memo, Mr. Claure named the more than two dozen executives who are part of his core leadership team and announced two new positions of chief experience officer and chief procurement officer. He also said three senior Sprint executives including Jeff Hallock, Sprint's chief marketing officer who oversaw Sprint's "Framily" marketing campaign, would be departing.

Sprint Chairman

Masayoshi Son

installed Mr. Claure as CEO in August to fix Sprint, which is trying to reverse years of losing money and customers. The carrier has been dogged by a network whose quality is worse than its rivals' and cellphone pricing plans that Mr. Claure has called confusing. In the recent quarter, Sprint lost 336,000 of the industry's most lucrative customers, more than any of the big four U.S. carriers.

Mr. Claure came in after Mr. Son dropped his pursuit to acquire smaller rival T-Mobile US Inc. And in his first three months on the job, Mr. Claure has been busy. Sprint launched new pricing plans and scrapped its "Framily" marketing campaign. The carrier also said recently it was letting go of about 2,000 employees and creating new executive level positions.

In the memo, Mr. Claure said he was appointing Sprint

executive Bob Johnson

to the newly created position of chief experience officer to improve customer service, and hired Frank Boyer, an outside consultant, as chief procurement officer.

Mr. Boyer will "oversee our efforts to evaluate where we spend every dollar and look for ways to improve our cost structure," Mr. Claure said.

On Monday, Sprint said it was bringing in Douglas Michelman, former head of corporate communications for Visa Inc., as senior vice president of corporate communications to replace Bill White who will leave the carrier at the end of the year.

Matt Carter,

head of Sprint's enterprise business is also departing the company, according to Mr. Claure's memo.

Sprint's "Framily" marketing campaign, which was headed up by the outgoing Mr. Hallock, was one of the first initiatives Mr. Claure cut when taking over. The offer reduced a customer's bill when more people were added to the wireless plan.

Sprint's new strategy mimics the shareable data plans offered by

AT&T
Inc.

and

Verizon Communications
Corp.

, but Sprint offers more data at a cheaper price.

At an investor conference last week, Mr. Claure said Sprint would soon launch an aggressive marketing campaign that would emphasize the idea that Sprint is the lowest cost wireless provider.

"I can tell you that you ain't seen nothing yet," Mr. Claure said of their coming ad campaign. "We are going to make it a very clear point…we are going to be the leader in pricing."

Over the weekend, Sprint released a new commercial featuring a goat, meant to represent AT&T and Verizon, that screams when it learns of how cheap Sprint's cellphone plans are.

Meanwhile, Mr. Claure said last week that Sprint would be looking to hire talented people from across the globe.

"You're going to be surprised in the next 60 to 90 days that talent, the caliber of talent that we're attracting to Sprint," he said. "I'm assembling a team of people that have done this before that are world-class leaders that have decided to come and join us."

Earlier this month, Sprint said

Nikesh Arora,

a former Google executive recently hired at SoftBank, was joining Sprint's board.

Last month, Sprint brought in

Junichi Miyakawa

from Sprint's owner, SoftBank, into a newly created position of Technical Chief Operating Officer. Mr. Miyakawa will relocate to Sprint's headquarters in Kansas from Japan and oversee the company's current network chiefs

John Saw

and

Stephen Bye.

Mr. Claure also announced the creation of a unit that will focus on the rapidly growing minority segments of the U.S. population, and is seeking someone to lead the group, according to the memo.

Write to Ryan Knutson at ryan.knutson@wsj.com

Cramer: Forget the long game, for now

On Monday, Actavis announced that it would buy Allergan for a premium of $66 billion, or $219 a share. Then, the second largest oil service company, Halliburton, bid on the third largest, Baker Hughes.

“This has to signal some sort of top. You just don’t get such dramatic overpays versus where the stocks were a short time ago without wondering about the wisdom of these deals,” noted the “Mad Money” host.

But that doesn’t matter. These stocks just keep going higher, and Actavis now rallied 10 percent in one day.

Cramer sees a trend that if you stay skeptical, you lose in the short-term. If you thought the Actavis deal was too sketchy, then you missed some big profits on Tuesday. What did you really accomplish besides missing a terrific opportunity?

“It takes years for some stocks to make moves like that. If you can claim those points now, why not? And if you miss them in the name of prudence and cynicism, what have you really succeeded in doing other than making less money? When you put it like that, you have to question your questioning, don’t you?” Cramer said.

———————————————————-
Read more from Mad Money with Jim Cramer
Cramer Remix: This stock has begun to turn around
Cramer: Globalstar CEO defends his controversial stock
Cramer: Their weakness is our strength
———————————————————-

Or how about GoPro? Investors have been shorting the stock so badly that Cramer is surprised they haven’t been choked to death. But when GoPro announced a secondary offering of 10 million shares filed, from insiders and the company itself, they were in full glory mode, and the stock took off. Usually, this type of activity should depress a stock But not here.

So, while Cramer wants to be more questioning and critical of what is happening in the market, he knows when to recognize an opportunity. Time to consider the short-term view, and take advantage of proceeds while you can.

Cramer: Forget the long game, for now

On Monday, Actavis announced that it would buy Allergan for a premium of $66 billion, or $219 a share. Then, the second largest oil service company, Halliburton, bid on the third largest, Baker Hughes.

"This has to signal some sort of top. You just don't get such dramatic overpays versus where the stocks were a short time ago without wondering about the wisdom of these deals," noted the "Mad Money" host.

But that doesn't matter. These stocks just keep going higher, and Actavis now rallied 10 percent in one day.

Cramer sees a trend that if you stay skeptical, you lose in the short-term. If you thought the Actavis deal was too sketchy, then you missed some big profits on Tuesday. What did you really accomplish besides missing a terrific opportunity?

"It takes years for some stocks to make moves like that. If you can claim those points now, why not? And if you miss them in the name of prudence and cynicism, what have you really succeeded in doing other than making less money? When you put it like that, you have to question your questioning, don't you?" Cramer said.

----------------------------------------------------------
Read more from Mad Money with Jim Cramer
Cramer Remix: This stock has begun to turn around
Cramer: Globalstar CEO defends his controversial stock
Cramer: Their weakness is our strength
----------------------------------------------------------

Or how about GoPro? Investors have been shorting the stock so badly that Cramer is surprised they haven't been choked to death. But when GoPro announced a secondary offering of 10 million shares filed, from insiders and the company itself, they were in full glory mode, and the stock took off. Usually, this type of activity should depress a stock But not here.

So, while Cramer wants to be more questioning and critical of what is happening in the market, he knows when to recognize an opportunity. Time to consider the short-term view, and take advantage of proceeds while you can.

 

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Google's Project Loon Woos Telecom Giants

Some telecom analysts view Project Loon, Google's effort to beam Internet signals from high-altitude balloons, as a threat to incumbent carriers. But Google wants to partner rather than compete, and some large wireless players have stepped forward.

The search giant said Monday it will team up with Telstra to test 20 Loon balloons in Western Queensland next month. The telecom provider — Australia's largest — will give Google access to wireless spectrum and terrestrial base stations, a Google spokeswoman said.

Google is running similar tests with Britain's Vodafone in New Zealand and Spain's Telefonica in South America.

Loon aims to operate a ring of balloons circling the Earth at roughly 65,000 feet that receive and transmit via LTE, a popular mobile communication standard, to extend existing wireless networks to less-populated areas that previously were considered too expensive to cover.

The effort faces substantial technical and regulatory challenges, but its business model is emerging. Google's pitch is that telecom companies keep their relationships with subscribers, while Loon reduces the cost to expand into rural areas and ultimately fills out spotty coverage.

If Google manages to get commercial service up and running – a big if – it plans to share revenue with telecom providers.

"We partner with telcos in every country we roll out in," said Mike Cassidy, vice president of Project Loon, during a talk on November 8 at The Next Billion conference in New York. "The telcos are trying to reach their rural population that they can't reach today. The telco does the billing for the customer, they own the customer, they do the customer support. They market the service to the customer."

Google hopes to make Loon a cost-effective alternative to building new ground-based cell towers, he explained.

"We ask, 'What if we put the cell towers up in the sky and share the revenue with you?' They say, 'sounds great,' and it's working really well," Cassidy said.

However, the relationship is not as cozy as Cassidy portrays, according to Rajeev Chand, head of research at Rutberg & Company, an investment bank focused on the mobile industry.

Telecom companies are concerned that Google could use Project Loon to compete with them, Chand said. Google already competes with broadband Internet providers through its fast fiber-optic Internet service, Google Fiber, in some U.S. cities.

However, telecom companies in developing markets have a "genuine interest" in testing integration with Loon, he added.

Chand recently talked to 12 wireless network operators about Loon and heard mixed views. Some, like Telstra, Vodafone and Telefonica, are already testing it, while others are considering tests and a third group did not want to get involved. He declined to mention other company names, but said they are all outside the U.S.

Loon may help telecom operators reach people who currently lack Internet connectivity, which is a goal of many governments. So a partnership with Loon may help telecom companies negotiate with regulators for more wireless spectrum, Chand said.

Such partnerships may also help wireless operators negotiate with existing telecom-equipment makers, such as Ericsson, Huawei, Nokia and Alcatel-Lucent, which sell components for existing network expansion through cell towers, he added.

"Loon has graduated from silly to an experiment that people need to pay attention to, partly because of telecom operator involvement in these tests," Chand said.

______________________________________________________

For the latest news and analysis,

Get breaking news and personal-tech reviews delivered right to your inbox.

More from WSJ.D: And make sure to visit WSJ.D for all of our news, personal tech coverage, analysis and more, and add our XML feed to your favorite reader.

 

No longer interested email from Mining News?. Please click here to unsubscribe

Google's Project Loon Woos Telecom Giants

Some telecom analysts view Project Loon, Google's effort to beam Internet signals from high-altitude balloons, as a threat to incumbent carriers. But Google wants to partner rather than compete, and some large wireless players have stepped forward.

The search giant said Monday it will team up with Telstra to test 20 Loon balloons in Western Queensland next month. The telecom provider — Australia's largest — will give Google access to wireless spectrum and terrestrial base stations, a Google spokeswoman said.

Google is running similar tests with Britain's Vodafone in New Zealand and Spain's Telefonica in South America.

Loon aims to operate a ring of balloons circling the Earth at roughly 65,000 feet that receive and transmit via LTE, a popular mobile communication standard, to extend existing wireless networks to less-populated areas that previously were considered too expensive to cover.

The effort faces substantial technical and regulatory challenges, but its business model is emerging. Google's pitch is that telecom companies keep their relationships with subscribers, while Loon reduces the cost to expand into rural areas and ultimately fills out spotty coverage.

If Google manages to get commercial service up and running – a big if – it plans to share revenue with telecom providers.

"We partner with telcos in every country we roll out in," said Mike Cassidy, vice president of Project Loon, during a talk on November 8 at The Next Billion conference in New York. "The telcos are trying to reach their rural population that they can't reach today. The telco does the billing for the customer, they own the customer, they do the customer support. They market the service to the customer."

Google hopes to make Loon a cost-effective alternative to building new ground-based cell towers, he explained.

"We ask, 'What if we put the cell towers up in the sky and share the revenue with you?' They say, 'sounds great,' and it's working really well," Cassidy said.

However, the relationship is not as cozy as Cassidy portrays, according to Rajeev Chand, head of research at Rutberg & Company, an investment bank focused on the mobile industry.

Telecom companies are concerned that Google could use Project Loon to compete with them, Chand said. Google already competes with broadband Internet providers through its fast fiber-optic Internet service, Google Fiber, in some U.S. cities.

However, telecom companies in developing markets have a "genuine interest" in testing integration with Loon, he added.

Chand recently talked to 12 wireless network operators about Loon and heard mixed views. Some, like Telstra, Vodafone and Telefonica, are already testing it, while others are considering tests and a third group did not want to get involved. He declined to mention other company names, but said they are all outside the U.S.

Loon may help telecom operators reach people who currently lack Internet connectivity, which is a goal of many governments. So a partnership with Loon may help telecom companies negotiate with regulators for more wireless spectrum, Chand said.

Such partnerships may also help wireless operators negotiate with existing telecom-equipment makers, such as Ericsson, Huawei, Nokia and Alcatel-Lucent, which sell components for existing network expansion through cell towers, he added.

"Loon has graduated from silly to an experiment that people need to pay attention to, partly because of telecom operator involvement in these tests," Chand said.

______________________________________________________

For the latest news and analysis,

Get breaking news and personal-tech reviews delivered right to your inbox.

More from WSJ.D: And make sure to visit WSJ.D for all of our news, personal tech coverage, analysis and more, and add our XML feed to your favorite reader.

Will Sprint (S) Stock Be Helped Today by CEO’s Management Shakeup?

By Tedd Cohen

| 11/18/14 – 07:53 AM EST

NEW YORK (TheStreet) — Shares of Sprint
(S) are up 0.41% to $4.93 in pre-market trading after it was reported that new Chief Executive Marcelo Claure is shuffling top executives as he tries to turn around the nation’s struggling, third-place wireless carrier, the Wall Street Journal reports.

“It’s often said that the people are the greatest asset of a company. I disagree,” Mr. Claure wrote in the memo distributed to Sprint employees last week. “The right people are the most important asset.”

In the memo, Mr. Claure named the more than two dozen executives who are part of his core leadership team and announced two new positions of chief experience officer and chief procurement officer. He also said three senior Sprint executives including Jeff Hallock, Sprint’s chief marketing officer who oversaw Sprint’s “Framily” marketing campaign, would be departing.

Must Read: Warren Buffett’s 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

S data by YCharts

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Why Sprint keeps introducing attractive plans to create value

Why Sprint’s stock plunged after the earnings announcement (Part 12 of 16)

(Continued from Part 11)

Sprint introduced a number of lower-price plans 

Under the leadership of new CEO Marcelo Claure, Sprint (S) undertook a number of initiatives to attract customers. In August, he introduced a $60 per month unlimited data, text, and voice plan. Comparatively, T-Mobile (TMUS) offers the same unlimited plan for $80 per month. Verizon (VZ) and AT&T (T) don't offer unlimited plans at all.

Claure then introduced a Family Share Pack plan. It gives customers double high-speed data at a lower price than AT&T and Verizon. These are similar to the family plans that Verizon and AT&T offer—the  More Everything plan  and Mobile Share Value plan , respectively.

In September, Sprint started offering the unlimited plan for Apple's (AAPL) iPhone 6 for $50 per month. Under its "iPhone for Life" plan, the iPhone 6 cost would start at $20 per month.

Sprint clearly introduced these plans to create value for customers. Management mentioned that it's seeing early signs of customers realizing the value of being associated with Sprint. The company has seen an increase of eight times in accounts with three or more lines—compared to the monthly run rate before the pricing changes.

Sprint's ARPU levels are declining

Although the plans started to attract more subscribers, it's affecting Sprint's average revenue per user (or ARPU) metric. As the chart above shows, Sprint's ARPU continues to decline. It declined from $64.24 in fiscal 2Q13 to $60.58 in fiscal 2Q14. This decline was also influenced by a higher tablet mix. This tends to draw lower revenue than smartphones due to the absence of voice-related revenues for tablets.

Another reason for the decline in ARPU was Sprint's strategy to put as many customers as possible on installment plans. Earlier in this series, we discussed why Sprint prefers to promote installment plans versus the subsidy plans. Although installment plans have higher operating margins associated with them, these plans tend to have lower monthly service fees compared to subsidy plans.

Continue to Part 13

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Information Technology
• Company Earnings
• Sprint
• Verizon

Why Sprint keeps introducing attractive plans to create value

Why Sprint's stock plunged after the earnings announcement (Part 12 of 16)

(Continued from Part 11)

Sprint introduced a number of lower-price plans 

Under the leadership of new CEO Marcelo Claure, Sprint (S) undertook a number of initiatives to attract customers. In August, he introduced a $60 per month unlimited data, text, and voice plan. Comparatively, T-Mobile (TMUS) offers the same unlimited plan for $80 per month. Verizon (VZ) and AT&T (T) don't offer unlimited plans at all.

Claure then introduced a Family Share Pack plan. It gives customers double high-speed data at a lower price than AT&T and Verizon. These are similar to the family plans that Verizon and AT&T offer—the  More Everything plan  and Mobile Share Value plan , respectively.

In September, Sprint started offering the unlimited plan for Apple's (AAPL) iPhone 6 for $50 per month. Under its "iPhone for Life" plan, the iPhone 6 cost would start at $20 per month.

Sprint clearly introduced these plans to create value for customers. Management mentioned that it's seeing early signs of customers realizing the value of being associated with Sprint. The company has seen an increase of eight times in accounts with three or more lines—compared to the monthly run rate before the pricing changes.

Sprint's ARPU levels are declining

Although the plans started to attract more subscribers, it's affecting Sprint's average revenue per user (or ARPU) metric. As the chart above shows, Sprint's ARPU continues to decline. It declined from $64.24 in fiscal 2Q13 to $60.58 in fiscal 2Q14. This decline was also influenced by a higher tablet mix. This tends to draw lower revenue than smartphones due to the absence of voice-related revenues for tablets.

Another reason for the decline in ARPU was Sprint's strategy to put as many customers as possible on installment plans. Earlier in this series, we discussed why Sprint prefers to promote installment plans versus the subsidy plans. Although installment plans have higher operating margins associated with them, these plans tend to have lower monthly service fees compared to subsidy plans.

Continue to Part 13

Browse this series on Market Realist:

• Part 1 - Must-know: Sprint's stock decreased after the earnings
• Part 2 - Why Apple's iPhone 6 could instill life into Sprint
• Part 3 - Why Sprint is targeting prime customers to improve its churn rate

• Information Technology
• Company Earnings
• Sprint
• Verizon

 

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The case for all-time highs in tech

While some traders think the surge in tech stocks is reminiscent of the tech bubble of the late '90s, one leading technical analyst believes it's going even higher.

Calling it one of his favorite ETFs, Ari Wald, head of technical analysis at Oppenheimer & Co., says the QQQ is a buy. The ETF, which tracks the Nasdaq 100 Index, is up nearly 18 percent year-to-date.

"I do love the QQQ here," said Wald.

View photo

.

A 15-year chart of the relative strength of the QQQ makes the case to go long, according to Wald. That chart is made by taking the QQQ's price and dividing it by the price of the S&P 500. When the chart moves higher, that means the QQQ is outperforming the broad market index. Likewise, when it moves down, the QQQ is a laggard.

From 2000 to 2002, the QQQ fell precipitously relative to the S&P 500. Wald sees the subsequent period as a time ETF built a base of support. "Now it's really broken out to the upside, retracing that stark underperformance from 2000 to 2002," he said. "Over the coming years, I think that it continues to retrace that. I think this remains leadership."

Wald's chart shows that the QQQ relative to the S&P 500 recently broke above a four-year resistance line. He said that indicates a gain in momentum. As it occurred within what he sees as an uptrend channel, Wald expects more positive moves ahead.

"I think QQQ continues to lead the way higher," he said.

However, David Seaburg, head of sales trading at Cowen and Company, is not a fan of the QQQ, which holds the 100 largest non-financial companies in the Nasdaq. Instead, he thinks small caps are a better buy.

"Small caps are going to continue to run," Seaburg said. "The QQQ is going to trade higher. But from a performance perspective, as far as closing that performance gap, I think the small caps are what you want to own going into the end of the year."

Seaburg is bullish on small caps for several reasons. He believes the stronger dollar is going to negatively impact larger companies with more foreign exposure than small caps. And he sees small caps as a contrarian buy because they have been underperforming large cap stocks in 2014.

On a year-to-date basis, the small cap Russell 2000 is almost flat compared to the S&P 500's gain of 11 percent.

"I like the smaller-cap names here versus the QQQ," he said. "I think they're going to outperform into the end of the year."

• Finance
• Investment & Company Information
• QQQ

The case for all-time highs in tech

While some traders think the surge in tech stocks is reminiscent of the tech bubble of the late '90s, one leading technical analyst believes it's going even higher.

Calling it one of his favorite ETFs, Ari Wald, head of technical analysis at Oppenheimer & Co., says the QQQ is a buy. The ETF, which tracks the Nasdaq 100 Index, is up nearly 18 percent year-to-date.

"I do love the QQQ here," said Wald.

View photo

.

A 15-year chart of the relative strength of the QQQ makes the case to go long, according to Wald. That chart is made by taking the QQQ's price and dividing it by the price of the S&P 500. When the chart moves higher, that means the QQQ is outperforming the broad market index. Likewise, when it moves down, the QQQ is a laggard.

From 2000 to 2002, the QQQ fell precipitously relative to the S&P 500. Wald sees the subsequent period as a time ETF built a base of support. "Now it's really broken out to the upside, retracing that stark underperformance from 2000 to 2002," he said. "Over the coming years, I think that it continues to retrace that. I think this remains leadership."

Wald's chart shows that the QQQ relative to the S&P 500 recently broke above a four-year resistance line. He said that indicates a gain in momentum. As it occurred within what he sees as an uptrend channel, Wald expects more positive moves ahead.

"I think QQQ continues to lead the way higher," he said.

However, David Seaburg, head of sales trading at Cowen and Company, is not a fan of the QQQ, which holds the 100 largest non-financial companies in the Nasdaq. Instead, he thinks small caps are a better buy.

"Small caps are going to continue to run," Seaburg said. "The QQQ is going to trade higher. But from a performance perspective, as far as closing that performance gap, I think the small caps are what you want to own going into the end of the year."

Seaburg is bullish on small caps for several reasons. He believes the stronger dollar is going to negatively impact larger companies with more foreign exposure than small caps. And he sees small caps as a contrarian buy because they have been underperforming large cap stocks in 2014.

On a year-to-date basis, the small cap Russell 2000 is almost flat compared to the S&P 500's gain of 11 percent.

"I like the smaller-cap names here versus the QQQ," he said. "I think they're going to outperform into the end of the year."

• Finance
• Investment & Company Information
• QQQ

 

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Why Sprint has seen an improvement in its network performance

Why Sprint’s stock plunged after the earnings announcement (Part 10 of 16)

(Continued from Part 9)

Sprint made progress on completing its 4G LTE network build

Sprint (S) is in the process of replacing its entire 3G network with a high-speed 4G/LTE network. Its Long-Term Evolution (or LTE) coverage now covers 260 million people in the U.S. across 500 cities.

Sprint's network works on three spectrums:

1. 800 megahertz (or MHz)
2. 1.9 gigahertz (or GHz)
3. 2.5 GHz

Sprint Spark service combines these spectrums. It has the potential to deliver wireless speeds of 50–60 megabits per second (or Mbps) on 4G LTE network. A few months ago, Sprint also claimed that it partnered with chip maker  Qualcomm (QCOM) to provide peak data speeds in excess of 150 Mbps on its devices.

Now, Sprint expects the nationwide deployment of voice service on the 800 MHz spectrum to be complete by the end of this calendar year. It has reached 50% of the total LTE footprint. In regards to the 2.5 GHz spectrum, Sprint mentioned that it's on track to cover 100 million point of presence (or PoP) by the end of the year. It already reached coverage of 92 million. However, to speed up the transition, the company is planning to only focus on three to five markets in the U.S. at the beginning.

Sprint definitely made some progress in terms of network build—compared to last quarter. Market Realist covered this aspect in " Why Sprint continues to lose subscribers in 2014 ."

Sprint continues to have the worst network performance

Sprint also claimed that the preliminary results by an independent research firm indicate that Sprint achieved significant year-over-year (or YoY) improvement in all aspects of network performance in the second half of 2014. However, this wasn't the case in the first half of 2014.

According to a report from RootScore and as the above chart shows, Verizon (VZ) had the best overall network performance. It was followed by AT&T (T). T-Mobile (TMUS) had the next best performance. Sprint was the worst performer in the first half of 2014.

The overall performance takes into account various parameters like network reliability, coverage, data performance, call performance, and text performance.

Continue to Part 11

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Information Technology
• network performance

Ikanos Fusiv(R) Chipset Powers New Multi-Mode LTE CPE Platform From Mako Networks

FREMONT, CA–(Marketwired – Nov 18, 2014) – Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of advanced broadband semiconductor and software products for the connected home, today announced that its powerful Fusiv® gateway processor will be featured in Mako Networks’ multi-mode LTE CPE platform certified to operate on the Sprint (NYSE: S) network. This new CPE forms part of Mako’s PCI-DSS certified network management system and is optimized to provide the highest level of security for payments and other financial transactions across corporate networks.

Incorporating redundant network interfaces, the Mako CPE heightens reliability, supporting the ability to fail-over to a secondary LTE connection in the event of a network disruption on its primary network connection. Its multi-mode network interface is complemented by a high-performance, dual-band concurrent Wi-Fi wireless router, a powerful firewall, and a host of other technologies designed to help protect businesses — including multisite businesses, retailers, and franchise operators — that process, store or transmit credit card data. The CPE integrates seamlessly with Mako Networks’ cloud-based Central Management System (CMS), allowing centralized remote access from the cloud for network administration and configuration. 

The introduction of the multi-mode LTE gateway and its certification for deployment on Sprint’s network are significant steps for Ikanos, supporting the company’s objective to further expand its addressable market to include LTE wireless gateways, augmenting its technology leadership position in wired gateways that are today deployed by top-tier carriers worldwide. The Fusiv® processor’s distributed architecture provides carriers with ample headroom for growth, allowing the chip’s host processor to support a breadth of carrier-specific applications while using multiple, dedicated acceleration processors to offload functions as diverse as cloud access, high-performance wireless, content distribution within the home or enterprise, and network-attached storage (NAS).

“Our partnership with Ikanos has resulted in what we believe is one of the most full-featured, high-performance multi-mode LTE gateway platforms for small and multi-site businesses,” said Simon Gamble, President of Mako Networks North America. “The Fusiv® processor gave us the high performance we were looking for, reduced our componentry, and streamlined our development process.”

“The introduction of this multi-mode LTE CPE by our partner, Mako Networks, represents an important milestone for Ikanos, as we execute on our plan for expanding our addressable market beyond DSL connectivity,” said Kourosh Amiri, vice president of marketing at Ikanos. “We are excited about this opportunity to partner with the team at Mako Networks on this platform and to collaborate on taking it through its qualification on Sprint’s network.”

About Mako Networks
Mako Networks provides simple, secure cloud-managed PCI DSS compliant networks for small and multisite businesses and is the world’s only internet-connected network vendor to have an end-to-end PCI DSS certification that is extensible to the merchant. Operating internationally from offices in San Francisco, London, Melbourne and Auckland, Mako integrates cloud management and reporting, Internet and Wi-Fi connectivity, 4G failover, VPNs, firewalls, end-to-end PCI DSS certification and content filtering into one, easy-to-manage system. For more information, visit www.makonetworks.com.

About Ikanos Communications, Inc.
Ikanos Communications, Inc. (NASDAQ: IKAN) is a leading provider of advanced broadband semiconductor and software products for the connected home. The company’s broadband DSL, communications processors and other offerings power access infrastructure and customer premises equipment for many of the world’s leading network equipment manufacturers and telecommunications service providers. For more information, visit www.ikanos.com.

© 2014 Ikanos Communications, Inc. All Rights Reserved. Ikanos Communications, Ikanos and the Ikanos logo, the Bandwidth without Boundaries tagline, Fusiv, Ikanos Velocity and Ikanos NodeScale are among the trademarks or registered trademarks of Ikanos Communications. All other trademarks mentioned herein are properties of their respective holders.

• Technology & Electronics
• Internet & Networking Technology
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• LTE

Why Sprint expects its capital expenditures to decline

Why Sprint’s stock plunged after the earnings announcement (Part 11 of 16)

(Continued from Part 10)

Telecom sector demands high capital expenditure investment

The telecom sector is very capital-intensive. To give you an idea, let's compare the ratio of cash flow from operations to capital expenditure among major telecom operators in the U.S.

The higher the ratio, the better the company is financially. The higher ratio leads to higher free cash flow. This allows the company to pursue opportunities to enhance shareholder value. This ratio also indicates the company's ability to invest in itself through capital expenditures.

As the chart below shows, Verizon (VZ) and AT&T (T) have the highest ratio of cash flow from operations to capital expenditure of ~1.7. However, this ratio is less than one for Sprint (S) and T-Mobile (TMUS). This shows that Sprint and T-Mobile are in a weaker financial situation.

Sprint is reducing its spending on capex this year

During the conference call to announce earnings, Sprint's management mentioned that they're focusing on reducing capital expenditures (or capex) to maximize capital efficiency. The company expects the capex spending to be below $6 billion for 2014—compared to ~$7 billion that it expected earlier. Incidentally, AT&T is also expecting its capex spending to reduce in the second half of 2014 .

Management also mentioned that the increased coverage and capacity of the Long-Term Evolution (or LTE) network allowed for data migration to LTE. It reduced the spending need on the 3G network that was expected earlier. The company is also seeing lower maintenance on capitalized spending this year. The lower capex spending should help Sprint become stronger financially.

You could gain exposure to Sprint through exchange-traded funds (or ETFs) like the iShares U.S. Telecommunications ETF (IYZ). IYZ has high exposure to Sprint.

Continue to Part 12

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Investment & Company Information
• Finance
• capital expenditure
• Sprint

Why Sprint expects its capital expenditures to decline

Why Sprint's stock plunged after the earnings announcement (Part 11 of 16)

(Continued from Part 10)

Telecom sector demands high capital expenditure investment

The telecom sector is very capital-intensive. To give you an idea, let's compare the ratio of cash flow from operations to capital expenditure among major telecom operators in the U.S.

The higher the ratio, the better the company is financially. The higher ratio leads to higher free cash flow. This allows the company to pursue opportunities to enhance shareholder value. This ratio also indicates the company's ability to invest in itself through capital expenditures.

As the chart below shows, Verizon (VZ) and AT&T (T) have the highest ratio of cash flow from operations to capital expenditure of ~1.7. However, this ratio is less than one for Sprint (S) and T-Mobile (TMUS). This shows that Sprint and T-Mobile are in a weaker financial situation.

Sprint is reducing its spending on capex this year

During the conference call to announce earnings, Sprint's management mentioned that they're focusing on reducing capital expenditures (or capex) to maximize capital efficiency. The company expects the capex spending to be below $6 billion for 2014—compared to ~$7 billion that it expected earlier. Incidentally, AT&T is also expecting its capex spending to reduce in the second half of 2014 .

Management also mentioned that the increased coverage and capacity of the Long-Term Evolution (or LTE) network allowed for data migration to LTE. It reduced the spending need on the 3G network that was expected earlier. The company is also seeing lower maintenance on capitalized spending this year. The lower capex spending should help Sprint become stronger financially.

You could gain exposure to Sprint through exchange-traded funds (or ETFs) like the iShares U.S. Telecommunications ETF (IYZ). IYZ has high exposure to Sprint.

Continue to Part 12

Browse this series on Market Realist:

• Part 1 - Must-know: Sprint's stock decreased after the earnings
• Part 2 - Why Apple's iPhone 6 could instill life into Sprint
• Part 3 - Why Sprint is targeting prime customers to improve its churn rate

• Investment & Company Information
• Finance
• capital expenditure
• Sprint

 

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Sprint Expands Conferencing Capabilities for Google Apps for Work

OVERLAND PARK, Kan.–(BUSINESS WIRE)–

Now easy to use Business conferencing services from UberConference by Switch Communications can be added to Sprint's (NYSE:S) mobile-centric Google Apps for Work offer to help employees be more collaborative and the business to grow faster. UberConference is a professional high-quality audio conference and online meeting solution. In addition to core conferencing capabilities, it extends Google Hangouts up to 100 participants. Run by a group of former Google employees, including Google Voice creator Craig Walker, UberConference is uniquely positioned to help companies optimize their Google Apps for Work suite.

Sprint business customers can now enjoy this suite of value-added services for Google Apps for Work via UberConference:

• Audio Conferences – Extend Google Hangouts to have up to 100 Dial-In participants
• PIN-less Conference Calls – makes it easier to join a conference from your mobile device
• Web Conferences – Call in to online meetings from desktop or mobile smart device
• Conference Control – Monitor loud background noise by muting disruptive callers
• Document Sharing – Display and share important documents on participant's screens
• Text Chat – Communicate with individual guests or guest groups
• Automatic Calling – Stay on-schedule by opting for automatic call to all participants
• HD Audio – Experience high call quality and clarity
• Call Recording – Save conferences as MP3s for easy playback

"UberConference delivers state of the art, cloud-based collaboration tools for conference calling, a space that hasn't seen innovation in decades," said Craig Walker, CEO of Switch Communications. "We've seen great traction from companies both large and small, who are looking to improve their employees' conferencing experience, while also helping reduce their annual conference costs. We look forward to accelerating our rapid growth trajectory by teaming with Sprint."

This builds on Sprint's mobile-centric solution of Google Apps for Work, which is part of the software-as-a-service portfolio, OfficeFuel^TM from Sprint Business.

Sprint's current Google Apps for Work offer also includes:

• Service and support – Full array of deployment and support services, called Carefree Cloud, to help businesses plan and use the solution across all employees. Carefree Cloud includes consultation, deployment, mobile device configuration, and 24/7 ongoing admin and end user support complete with online user training guidance to simplify the implementation and use of Google Apps for Work from end to end. An e-learning application and end-user live call support are available at no charge during an initial promotional period.*
• Mobile expertise – Sprint's core business in mobility offers a unique approach to help businesses adopt cloud services and use them effectively on an array of mobile devices so employees can work how they want to work. Users can learn more through a series of live webinars that train on how to set up and use Google Apps on mobile devices. More than 100 proprietary mobile training videos are only available from Sprint.
• Complete solution – Sprint serves as the one-stop shop for businesses by packaging all elements needed to support a comprehensive cloud-based collaboration experience. This includes value-added offers such as single sign-on and domain services.

"Sprint is committed to building a comprehensive mobile-centric Google Apps for Work offer that makes it easy for businesses to benefit from collaboration and adding UberConference to our portfolio of value-added services helps us achieve that goal," said Mike Fitz, vice president of business solution commercialization, Sprint Business. "Businesses will benefit from our combination of aggressive wireless pricing plans and cloud-based collaboration tools that help businesses remove obstacles for their employees and encourage them to work better together."

For more information about Sprint's offering of Google Apps for Work, businesses can visit www.sprint.com/googleapps. For more information about UberConference, please visit http://www.sprint.com/uberconference.

About Sprint Business

Sprint Business provides a range of simple, flexible services that help workforces to collaborate, mobilize and accelerate. As work changes, the winners will be the businesses that remove obstacles to best empower their employees to drive business success. Our solutions are designed specifically to help our customers’ people work better together, be more engaged and enjoy their jobs more. To learn more, visit www.sprint.com/business or join the conversation at www.sprint.com/futureofwork.

About Sprint:

Sprint (NYSE:S) is a communications services company that creates more and better ways to connect its customers to the things they care about most. Sprint served 55 million customers as of September 30, 2014 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; leading no-contract brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Sprint has been named to the Dow Jones Sustainability Index (DJSI) North America for the last four years. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

* For all businesses signed up for Google Apps for Business or Google Apps Unlimited with Sprint by Dec. 31, 2014, Sprint offers Carefree Cloud End User Complete Support for free to their Google Apps End Users for the lifetime of the business’s Google Apps subscription with Sprint. This is applicable to the business’ Google Apps End Users at the time of signing up for Google Apps services with Sprint and also applicable to the End Users added later during their Google Apps service with Sprint.

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• Google

Contact:

Media Relations Contacts:
Sprint
Stephanie Greenwood, 913-315-1612
Stephanie.greenwood@sprint.com
or
Sprint
Walter Fowler, 646-448-8180
Walter.fowler@sprint.com

Why cost-cutting efforts are helping Sprint

Why Sprint’s stock plunged after the earnings announcement (Part 7 of 16)

(Continued from Part 6)

Sprint is resorting to job cuts to save costs

Sprint's (S) revenues have been declining. As the chart below shows, Sprint's overall revenues declined sequentially in the last three out of four quarters. Sprint's revenues in fiscal 2Q14 were $8.49 billion. Revenues declined sequentially by $300 million—from $8.79 billion in fiscal 1Q14.

The company attributed the decline to the continuous losses of net postpaid phone connections. However, to offset the decline, Sprint started to implement a number of cost-cutting initiatives.

One of the main cost-cutting measures that Sprint undertook was to eliminate 2,000 jobs from its workforce. This is in addition to the 5,000 job cuts it announced earlier. 2014 has seen a lot of companies in the technology sector resorting to job cuts to save cost.

This year Microsoft (MSFT) announced 18,000 job cuts.  HP (HPQ) will eliminate ~11,000–16,000 jobs by October 2014.  AMD (AMD) will reduce its jobs by ~7%—impacting ~700 people. SAP (SAP) is also eliminating 1,500–2,500 jobs this year. By eliminating 2,000 jobs, Sprint is expecting to save $400 million on an annualized basis.

Sprint plans to save a total of $1.5 billion annually

Sprint wants to eliminate $1.5 billion in cost on an annualized basis. In addition to job cuts, Sprint is also focused on simplifying IT and customer care processes. This will help it save another $150 million annually. The company also plans to save another $100 by lowering distribution and procurement costs.

In addition to cost savings, Sprint also plans to invest selectively in growth areas. For example, Sprint plans to have a call center located at its headquarter campus in Overland Park, Kansas. The call center will serve its top customers.

Continue to Part 8

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Information Technology
• Business

Why cost-cutting efforts are helping Sprint

Why Sprint's stock plunged after the earnings announcement (Part 7 of 16)

(Continued from Part 6)

Sprint is resorting to job cuts to save costs

Sprint's (S) revenues have been declining. As the chart below shows, Sprint's overall revenues declined sequentially in the last three out of four quarters. Sprint's revenues in fiscal 2Q14 were $8.49 billion. Revenues declined sequentially by $300 million—from $8.79 billion in fiscal 1Q14.

The company attributed the decline to the continuous losses of net postpaid phone connections. However, to offset the decline, Sprint started to implement a number of cost-cutting initiatives.

One of the main cost-cutting measures that Sprint undertook was to eliminate 2,000 jobs from its workforce. This is in addition to the 5,000 job cuts it announced earlier. 2014 has seen a lot of companies in the technology sector resorting to job cuts to save cost.

This year Microsoft (MSFT) announced 18,000 job cuts.  HP (HPQ) will eliminate ~11,000–16,000 jobs by October 2014.  AMD (AMD) will reduce its jobs by ~7%—impacting ~700 people. SAP (SAP) is also eliminating 1,500–2,500 jobs this year. By eliminating 2,000 jobs, Sprint is expecting to save $400 million on an annualized basis.

Sprint plans to save a total of $1.5 billion annually

Sprint wants to eliminate $1.5 billion in cost on an annualized basis. In addition to job cuts, Sprint is also focused on simplifying IT and customer care processes. This will help it save another $150 million annually. The company also plans to save another $100 by lowering distribution and procurement costs.

In addition to cost savings, Sprint also plans to invest selectively in growth areas. For example, Sprint plans to have a call center located at its headquarter campus in Overland Park, Kansas. The call center will serve its top customers.

Continue to Part 8

Browse this series on Market Realist:

• Part 1 - Must-know: Sprint's stock decreased after the earnings
• Part 2 - Why Apple's iPhone 6 could instill life into Sprint
• Part 3 - Why Sprint is targeting prime customers to improve its churn rate

• Information Technology
• Business

 

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Why Sprint might sell its Wireline segment

Why Sprint’s stock plunged after the earnings announcement (Part 4 of 16)

(Continued from Part 3)

Sprint's Wireline segment continues to decline 

Earlier in the series, we discussed Sprint's (S) wireless division. However, Sprint generates ~8% of its total revenues from its Wireline segment. The segment is declining at a faster rate than the Wireless segment in terms of revenues and margins. Sprint's Wireline segment's revenues declined by 19% year-over-year (or YoY). Its adjusted earnings before interest, tax, depreciation, and amortization (or EBITDA) declined at an even faster rate. It declined from $117 million in fiscal 3Q13 to $27 million in fiscal 3Q14.

Compared to its peers, the Wireline segment's revenue decline for Sprint is bigger than Verizon (VZ) and AT&T's (T) declines. As the chart below shows, the revenue decline rate for Verizon and AT&T is less than 1% each. Sprint attributed its decline to decreasing voice revenues and the decline in cable voice-over IP migrations.

Market Realist highlighted Verizon and AT&T's wireline businesses in " Must know: Why AT&T's wireline business continues to decline " and " Must-know: Why Verizon saw a turnaround in its wireline segment ."

Sprint might sell its wireline business

During the earnings conference call, Sprint's management was asked whether or not the company might sell its wireline division. Management replied that they're reviewing the move. They will provide a concrete answer in a few months.

Sprint should sell a declining business like wireline. It would also help it focus on its wireless business. It would become a much more potent competitor for Verizon and AT&T.

A few days ago, Investor's Business Daily reported that an Oppenheimer analyst speculated that Sprint could sell its wireline business to Level 3 (LVLT) for $4 billion. LVLT also provides communications services to wholesale and enterprises customers—similar to Sprint.

However, other analysts believe that CenturyLink (or CTL) or Windstream (WIN) would be a better fit for Sprint's wireline business.

Continue to Part 5

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Verizon

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Why Sprint plans to eventually eliminate subsidy plans

Why Sprint’s stock plunged after the earnings announcement (Part 5 of 16)

(Continued from Part 4)

Installment plans becoming more popular

Under the subsidy plan, a customer enters into a two-year contract with the telecom provider. For example, you can buy an Apple (AAPL) iPhone 6 for a starting price of $199 under a two-year contract with the major telecom providers.

However, installment plans are different from subsidy plans. Under these plans, customers can pay the cost of their device in monthly installments for a certain period of time. The customers also have the flexibility to upgrade their devices early under these plans.

As a result, these plans are becoming more popular with customers. We discussed this trend shift in " Why we're seeing a telecom shift from subsidy to installment plans ." Sprint' (S) Easy Pay is a type of installment plan. It's similar to Verizon's (VZ)  Edge  plan, AT&T's (T) Next  plan, and T-Mobile's (TMUS) Jump plan.

Sprint wants to increase its installment plan penetration

Another benefit that telecom companies get from the popularity of these plans is that they save the subsidy cost. This boosts margins. This is why Sprint is thinking about eliminating the subsidy plans completely by sometime in 2015.

As the above chart shows, the installment plan penetration at Sprint was ~28% in the quarter ending in June. However, during the conference call to announce earnings, Sprint's CEO, Marcelo Claure, mentioned that the mix of installment plans decreased to 20% in August before he joined the company. He also mentioned that this penetration is currently its highest level ever.

In comparison,  Verizon's EDGE plan penetration was only 12% in the quarter ending in September. AT&T's plan was 52%.

Continue to Part 6

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Information Technology
• Finance
• installment plan