Will Sprint’s (S) new wireless plan stop the bleeding?

Over the last year, Sprint Nextel Corporation (NYSE:S) has become the equivalent of Stephen King’s Carrie. The redheaded step-child of the top 4 wireless companies - In the 4th quarter, Sprint posted a $29.5 billion loss (one of the largest in corporate history) . So can Sprint stop the bleeding or will the blood flow?

Sprint's loss was largely due to a write-down of the value of Nextel, which has suffered from poor network quality and customer service. Sprint said latest results included $317 million of pretax merger and integration-related charges.

Sprint's postpaid subscribers tumbled 1.1 million during the quarter, pushing total subscribers down 1.5% from a year earlier to 52.8 million.

Much like Carrie, in the gym shower at school, experiences the onset of what turns out to be her first-ever period. Her classmates (much like Wall Street) are slightly less than understanding. In fact, the other girls proceed to pelt the hapless Carrie with tampons and maxi-pads, chanting “Plug it up! Plug it up! Plug it up!”

So what has Sprint done to stop the bleeding?

While Sprint followed wireless industry leaders such as Verizon Wireless earlier this year with $99 plans that allowed consumers to make as many calls as they want each month for a flat rate, Sprint one-upped its rivals, by including text messages, Internet surfing and other data services in its plans. Competitors charged extra for these services.

Some people are plumping for a Sprint combination with T-Mobile. The math is appealing: Sprint has 21% of U.S. subscribers, and T-Mobile has 11%. Together, their 32% market share (assuming few subscribers leave) would make Sprint-T-Mobile the biggest wireless company in the U.S., ahead of AT&T, the current No. 1, and Verizon-Alltel, which would vault ahead of AT&T when the combination is completed.

Does Sprint really want to take over T-Mobile and spend its time integrating that, or does Sprint want instead to put its faith in its recently signed Wi-Max joint venture with Clearwire? Last month, Sprint signed the deal with Clearwire to start thinking about future, faster wireless networks while rivals battled it out for the scraps of the current business. Sprint has committed to not competing with the joint venture, which means its eye is firmly on the future. If all that is in place, why would Sprint take a sharp left and merge with T-Mobile?

Sprint one year Chart: 

At this point, it’s hard to say what the future has in store for Sprint. But at $8.50 a share, and an upward trend, it could be time to add to your portfolio some damaged goods that could pay off.

Disclaimer: The author has no shares of the securities mentioned in this article

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

If you liked this article, Eric Cheshier also contributes to the Master Picks Newsletter and the Quant Method , only available at WallstNewsletters.com.