A Foolish Week of Telecom
Apparently Research In Motion (NAS: RIMM) investors are so downtrodden that the company doesn't even have to make a profit to get shareholders all excited. On Thursday, the BlackBerry maker, vexed by its mislaid smartphone dominance, announced a loss of "only" $235 million for the quarter ended Sept.1.
On that bit of promising(?) news, RIM's share price leapt more than 20% after the market closed. The reason: During the previous quarter, RIM's loss was much larger, at $518 million.
RIM investor optimism is based on the future release of the BlackBerry 10, the phone RIM hopes to be a worthy rival to Apple's (NAS: AAPL) iPhone and the Android phones. RIM has twice delayed the BB 10 launch but has now committed to a first-quarter 2013 debut.
Department of hope springing eternal
Sprint Nextel (NYS: S) , another member of the telecom industry that hasn't been seeing much black ink these days, is intent on painting as optimistic a picture as it can. Sprint CEO Dan Hesse told Bloomberg that despite the obstacles -- which include a $4 billion network modernization and a $15.5 billion iPhone commitment to Apple -- the company will turn a profit in 2014.
Maybe so, said one analyst. Such a statement a year ago would have defied credibility, Scott Dinsdale of KDP Investment Advisors told Bloomberg: "[I]t was hard to listen to them. ... You just held your nose and held the bonds. Now they've gotten to the point where you can see light at the end of the tunnel."
This little telecom lost its way
Remember that deal last year that went bust, the one that had AT&T (NYS: T) acquiring T-Mobile USA for $39 billion? It seems that large wad of cash dangling before T-Mobile -- a subsidiary of Deutsche Telekom, by the way -- created a vortex of greed that made the mobile carrier put its investors' priorities ahead of its customers' needs.
That's what T-Mobile COO Jim Alling confessed to the audience at the Competitive Carriers Association this week. But T-Mobile has had a change of heart and mission, according to Alling. "Every single customer matters," he humbly submitted in his keynote address. "That is the most import thing we have to rekindle."
T-Mobile has been steadily losing its subscriber base, posting a net loss of 205,000 in the second quarter.
Meanwhile, Crown Castle International will pay T-Mobile USA $2.4 billion for the rights to take control of 7,200 of the carrier's towers. The average lease term for the towers will run 28 years. After that time Crown Castle can own them for another $2.4 billion.
T-Mobile will need that cash to help it gather the funds it needs to bring its network up to 4G specs. CEO John Legere said in a statement that the carrier "is working aggressively to make our 4G network stronger, faster, and more dependable for consumers, and this transaction will support our ongoing $4 billion network modernization initiative."
Is it time yet?
Twitter CEO Dick Costolo told CNBC this week that the company isn't yet ready for an IPO. Having an initial public offering "is a decision we'll make when we think the time is right for us," he said.
What about selling the company?
Nope: "We'll be a successful, independent company."
Leap Wireless International (NAS: LEAP) got a lift this week from Moody's Investor Services. The ratings agency was impressed enough with the company's plans to pay down its debt that its outlook for the company changed from "negative" to "stable." But when Leap does borrow money, it will still be rated at B2, five steps down into the junk cellar.
Moody's said it expects Leap to become "free cash flow positive" at the end of 2014.
iPhone fight! iPhone fight!
When trying to explain chaos theory, some people use the example of a butterfly whose flapping wings in China have an effect on the weather halfway around the world. In other words, the tiniest of actions can have a much greater result than can be predicted.
How about this turnaround on that theory: The demand for the new iPhone 5 has become so acute (5 million sold in its first weekend of availability) that a factory in China has erupted in violence.
How did my daughter's new iPhone do that?
It seems the longer hours needed to meet the Taiyuan-located Foxconn factory's quota for iPhones created enough tension to spark a brawl involving up to 2,000 workers and causing 40 injuries.
Controversy has surrounded Foxconn after a series of suicides by its workers since 2010. After Apple audited the working conditions at Foxconn last spring, the company promised to raise pay and shorten hours for its workers. But according to Geoffrey Crothall of the China Labour Bulletin, "There are no formal channels of communication or ways of resolving grievances through peaceful negotiation."
Remember, when it's time for that smartphone upgrade, that new iPhone may cause more havoc than just on your bill.
The iPhone 5's record-breaking sales numbers merely underscore the effect Apple has on the whole tech world. To get the full scoop on one of the preeminent names in technology today, grab your copy of the Fool's new premium report on Apple. It comes with a full year of updates, as well as an overview of the must-know opportunities and threats for every Apple investor. Click here to get started now.
The article A Foolish Week of Telecom originally appeared on Fool.com.Fool contributorDan Radovskyowns shares of AT&T. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
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