) primarily competes with Verizon (
) and AT&T (
) in the mobile business. We estimate that mobile internet
constitutes about 40% of Sprint's stock, just under the 43%
estimated contribution from mobile phones and plans.
Our price estimate of $4.35 for Sprint stock
is roughly in line with its market value.
Sprint recently announced a 2011 target for launch of tablets
capable of connecting to its 4G high-speed wireless network, a move
that could strengthen Sprint's product offering and help maintain
its 4G lead as competitors ramp up on their own 4G launches.
Tablets' Emerging Popularity
Tablets have been extremely popular amongst consumers lately and
can certainly be labeled one of the hottest new gadgets in the
market. According to Gartner forecasts, worldwide tablet sales
could reach 19.5 million units in 2010.
The growth in 2011 and beyond is likely to be strong and Gartner
anticipates that global tablet sales could surpass 208 million by
2014. Additionally, eMarketer estimates that the U.S. will continue
to command a majority share of global tablet sales till 2012.
Can 4G Tablet Trigger a Subscriber Turnaround?
While the majority of tablet growth is likely to come from
) iPad sales, we anticipate that its share will decline over time.
Clearly, tablets are gaining major adoption and a successful 4G
tablet from Sprint could leverage this trend and drive improvements
in subscriber revenues. If Sprint's new 4G device offerings
were to spark a rebound in
Sprint's CDMA subscriber share of the U.S. wireless
to 2007 levels by the end of our forecast period, our price
estimate could see about 12% upside.
Modify the chart below to see how a faster rebound in CDMA
subscribers can affect Sprint's stock value.
It is necessary to note that a successful tablet launch for
Sprint is not devoid of risks that could moderate any upside. A
major risk for Sprint stems form intensifying competition in the
tablet market that could threaten potential market share gains.
Verizon and T-Mobile are planning to launch their own 4G devices
while AT&T is likely to join the bandwagon somewhere in
See our full analysis of Sprint here