Sprint Nextel Emerges as Contender to Rule Local Market
Move over, Lockheed Martin.
Take a back seat, Fannie Mae.
There's a new kid in town to challenge your reign as Washington's biggest businesses.
As of today, Sprint Nextel Corp. is the Washington area's No. 1 company based on stock market valuation.
Kansas-based Sprint and Reston's Nextel completed their $35 billion merger on Friday. Today, the combined company's stock begins trading on the New York Stock Exchange under the symbol S, which was the single-letter symbol for Sears, Roebuck and Co. before Sears was acquired by Kmart Holding Corp.
And today the corporate headquarters officially moves to Reston -- though many of the Sprint executives who are coming to town are still in transition, and the company's operational headquarters will remain in Overland Park, Kan., a suburb of Kansas City.
This is the end of the road for what has been one of the region's best-performing technology stocks, at least over the past three years. After surviving the telecommunications crash -- which knocked its shares from almost $80 to under $3 -- Nextel stock climbed from a low of $2.78 a share three years ago to $33.32 when the stock stopped trading on Friday.
In the merger, Nextel shareholders will get the equivalent of 1.3 shares of Sprint Nextel for each of their Nextel shares. Less than $1 a share of that is expected to be cash, the rest will be stock, which will be tax-free. The exact payout is based on a formula so complex that the company plans to issue a preliminary breakdown before the market opens today and will not have a final number until later in the week.
The question for Washington investors in Nextel is what to do next. Should they keep their Sprint Nextel stock or cash in?
Wall Street is certainly high on Sprint. Twenty of the 25 analysts who follow the company rate the stock "buy" according to Bloomberg, the business news and data service.
That's an 80 percent endorsement -- twice the rate of "buys" for Verizon Communications Inc., which is the second-highest rated telephone company.
In contrast, the stock of Washington's other big phone company, MCI, gets "hold" ratings from 90 percent of the analysts who follow the company.