Sprint gets slapped with debt downgrade, lawsuit
by Chris Ziegler, posted May 4th 2008 at 7:33PM
If there's one thing
Sprint doesn't need at the moment, we'd say that "a harder time getting cash" ranks high on the list. That's where big ol' number three finds itself at the moment, though, thanks to a credit downgrade by Standard & Poor's from "BBB-" to "BB," a move that puts its bonds squarely in junk territory. S&P has some harsh words for Sprint regarding the move, too, explaining that it went down thanks to its "
assessment that Sprint Nextel's business risk profile is no longer supportive of an investment-grade rating given its deteriorating operating performance and lack of visibility in the wireless business." Lack of visibility in the wireless business, eh? Snap! The junkification of Sprint's debt coincides with the installment of a new CFO -- purely a coincidence, no doubt -- effective immediately.
But wait, the bad news isn't over. A workers' lawsuit filed in US District Court last week alleges that Sprint dumped pension plan cash into Sprint stock at a time when... well, let's just say that it wasn't exactly a solid investment. The suit names 12 Sprint board members as co-defendants and looks to recover the money lost as Sprint stock slid into the basement; furthermore, it's looking to garner class-action status, meaning that the carrier could potentially owe money to a whole boatload of employees if the plaintiffs win the whole shebang.
Read - Debt downgrade, new CFO
Read - Pension plan lawsuit
Filed under: Sprint
Tags: bond, cfo, debt, junk, junk bond, JunkBond, lawsuit, pension, pension plan, PensionPlan, sprint, suit
Reader Comments (Page 1 of 1)
Mike @ May 4th 2008 8:22PM
I have been a loyal Sprint customer for the past 8 years. I have never really had a problem with service. At what point will this failing company get their act together? It seems that for who-knows-how-long there has been nothing but negative news about them.
If they continue to have these problems, and offer no solutions, I think they should give us loyal customers the option to leave without penalty.
*I have been eyeing the iPhone lately...
Chris @ May 4th 2008 9:18PM
What the hell? You've been a loyal customer for years with no real problems with service, and you think you deserve to leave without an ETF because they get bad press???
Mike @ May 4th 2008 8:23PM
I have been a loyal Sprint customer for the past 8 years. I have never really had a problem with service. At what point will this failing company get their act together? It seems that for who-knows-how-long there has been nothing but negative news about them.
If they continue to have these problems, and offer no solutions, I think they should give us loyal customers the option to leave without penalty.
*I have been eyeing the iPhone lately...
James @ May 4th 2008 8:36PM
Why, just because you have been a loyal customer? I have been for about 4 years and if they are continuously on front page for negative news, I will gladly pay my ETF fees to go to a different carrier. I don't see why Sprint owes you money to leave them...
--James
Mike @ May 4th 2008 9:00PM
What are you waiting for then? They don't owe me anything but better business. If they are unable to do that, why should we pay more for it? You can continue to give them money if you'd like, that's your problem, not mine...
Justin @ May 4th 2008 9:17PM
I will be with spring till the very end.. when they pry my phone from my dead (or their dead) hands.. I've been with the other carriers.. sprint has been the fastest, most reliable and flat out best carrier I've ever been with.
oh and I hit 5 yrs TODAY.. weird enough =) just looked at my original contract
Mike @ May 4th 2008 9:22PM
This will be my last post on this topic and on Engadget Mobile. I do have to apologize for being a little ornery on this subject. James, I apologize.
I feel that as a customer, if you continuously support a company, and upgrade your phone, sign a new contract (yes I know, I did this on my own and nobody told me to do it. I at the time had faith in Sprint), etc. and they still are unable to fix their problems by hiring and firing people, at what point do they have to look out for their customers? If they don't want to pay the full ETF for me leaving, fine. At least lower the ETF. I truly hope that Sprint does pull out of this. Not only do we suffer, but, there could be many who lose their jobs.
Thanks for listening. Keep up the great work, Engadget.
slamEVIL @ May 4th 2008 9:35PM
i feel that sprint's gonna be the next voce.
http://www.engadgetmobile.com/2008/02/02/did-voce-die-overnight-without-warning/
PEZ @ May 4th 2008 10:06PM
I have been saying this for months... Sprint is on its way out. TD's rumor to pick off Nextel, Lawsuits and just bad business.
I am telling you - 18-22 months. Gone, bought and beat up.
ThePremierAssassin @ May 4th 2008 11:06PM
I should probably abandon ship soon huh?
MadMike @ May 4th 2008 11:18PM
Is it officially on deathwatch yet?
thethirdmoose @ May 5th 2008 12:17AM
NOOOOOO
DONT TAKE MY SERO FROM ME!!!
orlandoreyes07 @ May 5th 2008 12:27AM
What is going to happen is that if Sprint wanted to issue debt such as bonds, they would have to give a higher rate of return to those taking on this debt. This will lead to lose of revenue since it is going out to bond holders so their stock prices will fall. It is a very bad situation that the housing markets has fallen into because of risk they have taken on, and righting off the losses. I really haven't been keeping up to what Sprint has been doing to get them in this situation but I don't know if the government is going to bail them out like they did with Bear Stearns. Maybe T-Mobile will play that roll if they buy them out.
zephead @ May 5th 2008 2:46AM
Looks like this is making the deal with DT a bit more desirable for the Sprint execs on the hot seat right now.
Duscrom @ May 5th 2008 3:45AM
Yeah..... DT, save us.. PLEASE! I just started my Contract, so.. yeah, i'm with Sprint till the bitter end. But as I said on the other story, I for one, welcome our German Overlords. Keep my centro or Mogul working.
Matt @ May 7th 2008 12:53PM
Sprint just sucks. I signed up for their SERO plan two years ago on the advice of a college friend who worked for Sprint. It was actually a pretty good deal, $30 a month, 500 any time minutes, unlimited data, text, picture mail, free A900 phone. Everything was peachy keen until this month, where my bill was suddenly $15 more than usual. Turns out they switched billing systems and all of a sudden I'm being charged for the text messaging and picture mail - and absolutely nobody over there wants to fix it. One of the customer service people even told me that it looked like I've been getting charged for text messaging since the very beginning, although my account DID show that THAT was supposed to be included. So yeah, since my contract is up, I'm all over the iPhone 2 as soon as it hits. With such terrible, unreliable, seedy customer service, and the most pathetic phone selection of all the major carriers - it's no wonder they're in such bad shape.
Yang @ May 9th 2008 11:32AM
"credit downgrade by Standard & Poor's from BB to BBB-". Um, that's an upgrade in credit rating.
xman @ May 5th 2008 8:42AM
LOL. I thought I was the only one who noticed the backwards rating.... Well what can u really expect this is a tech site not a financial one???? So I guess I can forgive the writer for overlooking it.
For those who don't know see below for investment grade ratings:
Anything below BBB- would be junk.
AAA
AA+, AA, AA-
A+, A, A-
BBB+, BBB, BBB-
dare instructor @ May 5th 2008 9:51AM
Yeah, as the source article says: "to BB from BBB-"