Bank on Banking

Refusing to give up, Sprint has taken yet another big step towards either complete failure, competitive wireless player with the $483 million acquisition of Virgin Mobile announced two days ago. Just how smart of a move is this, only time will tell. We can tell, however, that the acquisition price values Virgin Mobile at $5.50 per share, or a 31% premium over the previous day’s closing price. Although a few analysts think it is a good move, and a decent price, I’m not as convinced. There is tremendous competition in the wireless phone business right now, and a 31% bump in a stock that has already been on the rise the past several days (probably due to rumors), based on big anticipated cost savings (back office, marketing and network costs), and a continuing dominance in the pre-paid minute business, seems just a bit ambitious. But hey, I haven’t seen the numbers, projections, plans or meetings, so maybe it is a huge find and a bargain.

Regarding the new company, Sprint will keep the Virgin Mobile name, and retain its chief executive, who will continue to run the business. The plan is for Virgin Mobile to remain its own brand with its own name, only now coupled with deeper pockets and increased support from its soon-to-be parent, Sprint-Nextel.

Sprint Takes Another Crack At It