Sprint Nextel Shares Fall Following the Announcement of Expenditure Plans

October 11 00:00 2011

New York, October 11 (RainbowNewsLine.com) – American Telecom major Sprint Nextel’s stock (NYSE: S) took a major beating in the stock market. The company has lost 43% of its market capitalization since the beginning of this year.

The recent mayhem has been as a result of Sprint announcing mega expenditure plans. Sprint announced that it would spend huge sums of money on upgrading its infrastructure for its new wireless network as well as its handsets. This, they believe will allow them to provide the customers with a better experience and gain a larger market share.

Analysts have been very wary of this move. Within minutes of Sprint’s spending announcement, more than six analysts downgraded the rating on Sprints stock and the stock went into a nosedive. Analysts say that the cash position of the firm is not very strong and the proposed measures could lead to a liquidity crisis at the corporation.

Also, many analysts have been of the view that Sprint Nextel is good at making strategies but not at executing them. A few days earlier, they had to include the iPhone in their product offering to be more competitive against the giants AT&T as well as Verizon. This was a late move after losing a lot of market ground, say analysts who refuse to trust Sprints ability to execute what it claims it will.