Brokerages cut Sprint Nextel on plans to raise more funds

Reuters News
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Posted: Oct 10, 2011 8:34 AM
Brokerages cut Sprint Nextel on plans to raise more funds

(Reuters) - Several brokerages lowered their ratings on Sprint Nextel Corp <S.N> after the wireless provider said on Friday it needs to raise more money to upgrade its network, sparking concerns about its financial stability.

Sprint plans to spend $7 billion on a network upgrade that it wants to complete by end-2013, two years earlier than previously suggested.

J.P. Morgan cut Sprint Nextel to "neutral" from "overweight" and said the management would have to rebuild confidence among investors before the stock could work.

The company expects its liquidity to improve after 2013, implying a tough two years before that.

"In 2012 and 2013, Sprint will simultaneously face incredible stress on their finances, their network, their product line-up, and their customer service/brand," Bernstein Research said in a note and cut its price target on the stock to $2.50 from $3.00.

Shares of the company were down over 2 percent at $2.36 in pre-market trade on Monday. They closed at $2.41 on Friday on the New York Stock Exchange.

(Reporting by Sumit Jha in Bangalore; Editing by Roshni Menon)