3 Reasons Sprint (S) is Set to Crash

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InvestorPlace
Sprint (NYSE: S ) is looking pretty right now. The stock hit a 52-week-high of $5.37 on Tuesday, a run that made it look to some out there that the beleaguered telecom might just be a contender once more. It’s understandable why some investors might be tempted, considering the stock still hasn’t hit UBS’ target price of $5.50 or Raymond James’ (NYSE: RJF ) even more promising $6.00. Sprint’s earnings were good, reporting that revenue was up almost 3% year-on-year for the first quarter of 2011, totaling $8.3 billion. The company brought on 310,000 new contract subscribers and 846,000 prepaid subscribers to its mobile and web services during the quarter — the first that didn’t see Sprint shedding customers in some time. So is this Sprint’s great moment, when the faded communications giant bites back at Verizon (NYSE: VZ ) and AT&T (NYSE: T )? Don’t believe the hype. While Sprint may still be a compelling day-trading opportunity for investors, this isn’t the moment that it becomes a stock that will grow and grow. Here are three reasons that Sprint’s businesses isn’t about to grow in meaningful ways. No T-Mobile On Mar. 9, AT&T announced that it was acquiring T-Mobile USA from Deustche Telekom with the two merging in 2012. On Mar. 8 though, the business world thought that it was Sprint that was going to do the merging with T-Mobile , with Deutsche Telekom controlling a 50% stake in the new company. Had that happened, there have been a chance to fendoff AT&T and Verizon with the added resources brought on by T-Mobile.  Sprint is switching its Clearwire (NASDAQ: CLWR ) WiMax 4G network to an LTE 4G network — the difference in which is highly technical, but is important for smartphone manufacturers that are making the latter technology standard. With Sprint still uncommitted to an LTE switchover, things don’t look good for the company next year. No iPhone Apple (NASDAQ: AAPL ) and its iconic iPhone is a significant weapon in the telecom arsenal right now. While adding the device may not have made Verizon into the unstoppable juggernaut some analysts predicted it would, it has, after just three months on the service, become a significant part of that company’s smartphone business. With a 4G iPhone 5 compatible with AT&T (and by next year T-Mobile) and Verizon’s LTE networks expected in September , Sprint will be the last major national mobile provider not supporting Apple’s massively successful phone. AT&T activated 3.6 million iPhones in the first quarter of 2011 alone. That’s just a fraction of the audience that will continue to elude Sprint. More Losses Here’s the inescapable fact: Sprint hasn’t turned a profit since 2007. The company reported an operating loss of -$595 million in 2010, and a net loss of nearly -$3.5 billion. Sure, the company beat expectations for the first quarter, but considering the factors already discussed here, it doesn’t look like Sprint will suddenly see a remarkable influx of new money. Not from new subscribers, not from anywhere. As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at  @ajohnagnello and  become a fan of  InvestorPlace on Facebook.