Chesapeake Energy Corporation (CHK), Alcatel Lucent SA (ADR) (ALU), Sprint Corporation (S): Three Companies Trying to Regain Their Focus

3. Sprint

Sprint Corporation (NYSE:S) needs cash for its own refocusing efforts. The U.S. wireless company falls into a distant third place behind Verizon and AT&T. Sprint Corporation (NYSE:S) needs the cash to improve its network and pay off some of its $20 billion of debt. The plan is to sell itself to a company with cash.

Dish Network offered to buy all of Sprint Corporation (NYSE:S) for $25.5 billion, but that wasn’t enough. According to the Denver Post, “Dish is the country’s No. 2 satellite-TV company, and Sprint is the No. 3 wireless carrier. Dish had aimed to create the first nationwide provider of pay-TV and wireless services.” Interesting idea, but my gut tells me that’s a problem waiting to happen.

The Japanese telecommunications company SoftBank offered $21.6 billion for a 78% stake in Sprint Corporation (NYSE:S). The deal included $16.6 billion in cash – just what Sprint Corporation (NYSE:S) needs most. But there are some concerns.

When Softbank first confirmed the bidding talks in October 2012, Softbank’s shares dropped almost 17%. That’s because Softbank was focusing on increasing its competitiveness in Japan and paying off debt, and investors feared that Sprint Corporation (NYSE:S) would be a distraction from that focus.

Up or down vote?

I like the fact that each of these companies are taking serious steps forward – but they also don’t really have a choice. Lose your focus, lose your shirt. I’m leaning bullish on Chesapeake Energy Corporation (NYSE:CHK), neutral on Alcatel Lucent SA (ADR) (NYSE:ALU), and bearish on Sprint Nextel. But it’s too early to tell.

Will Chesapeake profitably increase oil production after selling off natural gas assets? Will Alcatel-Lucent trim the fat but keep the meat? Will Sprint use its new cash effectively to pay off debt and build the network?

The article 3 Companies Trying to Regain Their Focus originally appeared on Fool.com and is written by Marie Palumbo.

This article was written by John James and edited by Marie Palumbo and Chris Marasco. Chris Marasco is Head Editor of ADifferentAngle. None has a position in any stocks mentioned. The Motley Fool owns shares of Apache. Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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