One of the repeat selections in InvestorPlace’s Real America Index, Sprint Nextel (NYSE:S), has the misfortune for being in the wrong place at the wrong time.
Overland Park, Kan.-based Sprint Nextel was formed in 2005 through a $36 billion merger of Nextel, originally founded in 1987 as Fleet Call, and Sprint, originally formed in 1899 by Cleyson Brown as Brown Telephone Company.
The merger never really has seen much in the way of expected synergies, as Nextel’s network ran on a different technology than Sprint’s, making it difficult for the combined company to optimize its wireless infrastructure assets.
Nextel’s “push-to-talk” technology never found a wide audience, and as customers left the service they didn’t necessarily sign up with Sprint. Last quarter, Nextel lost 455,000 contracted customers, and only 228,000 rejoined the Sprint-branded service. Sprint wrote down $543 million of Nextel’s value last quarter in addition to the $29.7 billion writedown it took in 2008. At this point, all of the the merger’s value has now been written off, and Sprint will drop the Nextel network in June 2013.
Although Sprint’s stock price has rallied since last year, its positioning as the No. 3 player in a two-horse race industry is little changed. In fact, Sprint continues to lose market share to both AT&T (NYSE:T) and Verizon (NYSE:VZ).
Still, the company claims 56 million customers and $32 billion in revenue, and is is widely recognized for developing, engineering and initiating and delivering the first wireless 4G service from a national carrier in the United States.
Unfortunately, it will be difficult road ahead for Sprint, which at the very least will have a different name next year.
Check out the complete list of Real America Index components, along with an interactive map of short-term and long-term returns.
Marc Bastow is an Assistant Editor of InvestorPlace.com. As of this writing, he was long VZ.