Remember living in a world when the latest iPhone version was indicated by a number and not an X? Or when it used to be exclusive to only Verizon and AT&T? Well, the latest article in my “Fool Revisited” series covers this strange time in our not-so-distant past when Sprint Corporation (NYSE:S) was finally getting to sell the iPhone 5! And iPhone 4 models too! We’ve come a long way in 6+ years since the article was published.
The angle I took with the article was looking at some of the smaller regional carriers that had customers that might be attracted to the iPhone on Sprint, primarily because of its unlimited data plan, something that no other carrier was offering at the time. This wasn’t a terrible line of thinking, though it doesn’t look like it has paid off for the carrier’s stock in the meantime, and Sprint and T-Mobile remain distantly behind Verizon and AT&T in total subscribers even to this day.
Per usual, here’s the ancient tweet about the article hoping to drum of views and value:
Per the chart below, Sprint has not fared well versus the S&P 500 since I wrote this article. The company just never seemed to find a foothold even with the iPhone, primarily because the two duopolistic carriers ahead of it had such a long lead time on selling the phone. Using the compound annual growth rate (CAGR) and total growth, an investor would have been better off investing in an S&P 500 index fund than rolling the dice with Sprint from article publication (September 30, 2011) through January 26, 2018:
|Stock||Start Price||End Price||CAGR||Total Growth||Value of $10,000|
Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits
While an investment in Sprint did not lose money, there were many other solid options for an investor’s money at the time, many which I have covered previously in this series. I don’t think that Sprint is going to fail anytime soon, and it does have something that millions of subscribers like about its service. However AT&T and Verizon truly do dominate the market and have pricing power, while second-tier providers like Sprint and T-Mobile have to offer other incentives – like T-Mobile offering a year of Netflix – in order to attract new subscribers.
Until next time…
Disclaimer: I do not personally own shares of the companies mentioned here, and I have no plans to purchase shares of any company mentioned within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.