Sprint Nextel Corporation
(
S
) recently alleged major players in the cable TV market including
Time Warner Cable Inc.
(
TWC
),
Comcast Corp.
(
CMCSA
), Cable One Inc. and Cox Communications Inc. of infringing 12
patent rights regarding phone calls made over the internet, known
as voice over internet protocol or VoIP.
The third largest wireless communications company in the US,
Sprint Nextel, claimed that these stalwarts did not seek permission
from the company for using its patented VoIP technology and thus
filed a law suit against them.
Earlier in 2005, Sprint charged Vonage and Voiceglo
Communications on similar grounds. Vonage finally lost the case and
had to pay $69.5 million to Sprint for violating their VoIP patent
rights. Moreover, Sprint induced the company to ink a deal worth
$80 million to use their VoIP technology. Again in 2008, Sprint
filed a lawsuit against four smaller firms alleging violation of
VoIP patents.
The recent roll out of docsis 3.0 by most of the cable TV
operators, providing speed of nearly 50 mbps resulted in more data
usage by the subscribers. It is also gaining popularity among the
business class people. Concurrently, the use of VoIP technology is
also accelerating rapidly and we believe that every now and then
such infringements will tend to occur.
We believe that the iPhones and LTE upgrades along with
attractive product and service offerings and prepaid brands will
boost Sprint's wireless growth prospects. Further, the company
continues to benefit from the Network Vision plan, which is ahead
of its original schedule. However, funding issues pose significant
risks to Sprint. Lower margins in wireless and wireline, heavy
subsidies, higher spending and aggravated competitive threats also
add to our concerns.
We, thus, maintain our long-term Neutral recommendation for
Sprint. Currently, it has a Zacks#3 Rank, implying a short-term
"Hold" rating on the stock.
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
SPRINT NEXTEL (
S
): Free Stock Analysis Report
TIME WARNER CAB (
TWC
): Free Stock Analysis Report
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