Things have not gone well for Sprint ( S ) or its shareholders since its earnings report on July 27th. Its Lightsquared announcement and subsequent lack of a clear 4G strategy disappointed Sprint watchers causing the market to puke the stock 20% lower. Moreover, the company's inability to control costs in the face of higher competitive pressures from heavyweights AT&T ( T ) and Verizon ( VZ ) coupled with the 4G concerns added fuel to this worry (see Competitors Smack Sprint Around Though Selloff Overdone ).
However, the stock declined again by 10% yesterday, and time for a different reason. Clearwire ( CLWR ) announced disappointing Q2 results yesterday as its losses were higher than street expectations, resulting in the stock declining by 30% in a single trading session.
Sprint has a 54% non-controlling stake in Clearwire, which means that any major stock decline for Clearwire will affect Sprint as well. This is what precisely happened. Sprint also utilizes Clearwire's 4G wireless broadband network and offers high speed broadband connection to its customers.
Our $4.75 price estimate for Sprint's stock is about 25% above market price.