When Life Gives You Lemons...

Imagine for a moment that I am the owner of a lemonade stand (C). My stand, while it has been successful in the past, has never caught up to the income of my top two competitors (A and B). However, I swear I have the best product possible and I will be as good (if not better) than A and/or B within the next couple years. Why? I am completely changing my formula to something no one has really seen before. All I need is more money. You, the investor, now has to decide if my stand is worth the money.

While this is a long-shot example, let’s place this on a larger spectrum. Say, for example, my lemonade stand is now called Sprint. My competitors, A and B, are Verizon and AT&T. Obviously, the topic is not actually centered on lemonade, but 4G services. Sprint has done just what is implied above: they have declared they will be able to catch-up to Verizon and AT&T in terms of 4G service as long as they receive more income. They don’t have the money to spend the way they would like; however, Sprint Chief Financial Officer Joey Euteneuer said, “liquidity should begin to improve in 2014 once the roll-out is complete” (Goldman, 2011).

The question remains: is this a bargain worth investing in? Given their track record, is Sprint the company to trust in a situation like this? In April of this year, it was said that Sprint still lost money despite their adding 1.1 million new customers. Goldman states that a major reason Sprint is losing money is because they are not selling the iPhone 4 (2011). If one runs a search on Sprint, it would be evident that they have lost money AND customers the past three years. Can the iPhone 4 really be responsible for this? I mean, did it come out in 2008 and they still aren’t selling it?

What Sprint is attempting to do is courageous. Their business has not been able to stand up to mobile giants such as Verizon Wireless and AT&T. The fact that they are not ready to “throw in the towel” is admirable, but foolish. Or is it? The adage declares “it takes money to make money.” Perhaps if given the opportunity, Sprint will rise up and take down the competition. Take notice of the graph: Sprint is down from Verizon but up from AT&T. If customers want it, who are we to say no?

Ultimately, the world of 4G mobile coverage could be rocked in the coming months. Sprint is the third giant in wireless connectivity; if they fall out, where does that leave us? Goldman (2011) agrees that Sprint “has struggled to add new customers” but are working diligently on the problem. This little lemonade stand may be down, but it’s not out.