General Investing Forum

[Rawvega]

Geez, and the stock still went down as much as it did.  I wonder how much further it would've went down if they didn't buy any shares.  They gotta be getting close to 85% now.

 

83%

 

http://www.bloomberg.com/news/articles/2015-09-30/softbank-increases-its-stake-in-sprint-to-83-19-?cmpid=yhoo

[Ascertion]

83%

 

http://www.bloomberg.com/news/articles/2015-09-30/softbank-increases-its-stake-in-sprint-to-83-19-?cmpid=yhoo

I imagine in the near future they go private.  It'll suck because I was wanting to invest in Sprint for the long-term.

[JimBob]

I imagine in the near future they go private.  It'll suck because I was wanting to invest in Sprint for the long-term.

Softbank had previously assured this past summer that they would stop before 85%.  I assume it is administratively easier and more financially flexible to keep the child company a separate publicly-traded corporation.

[Arysyn]

How much stock would Softbank need to purchase to have Sprint go private, and say the price they bought that amount of stock at, was $5 each, how much money would it cost at that amount for Softbank to make Sprint go private?

[luvixuha]

How much stock would Softbank need to purchase to have Sprint go private, and say the price they bought that amount of stock at, was $5 each, how much money would it cost at that amount for Softbank to make Sprint go private?

At $5/share, 2.96 billion dollars.

[Arysyn]

At $5/share, 2.96 billion dollars.

Thank you for the information.

 

Based on that, it seems Softbank is advancing little by little towards taking Sprint private, rather than making any huge moves towards it.

[JimBob]

Softbank bought over $60 million of Sprint stock yesterday, a bit more than their usual drip of $25 million.

 

http://www.dakotafinancialnews.com/sprint-corp-major-shareholder-buys-60580592-40-in-stock-s/486270/

[DanielB]

At this point, it simply makes sense for Softbank to purchase the remainder of Sprint that they do not yet already own. Steps to immediately follow to significantly cut operating costs would include:

 

• Closure of the Direct2You program
• Closure of "SprintShacks" (at least the Sprint portion) - what I'm hearing from several "Shack" managers is that they're just not bringing in any Sprint business
• Less lenient customer service approach - I was in a corporate store the other day while a ghetto Sprint customer berated the staff and other waiting customers for over an hour while he waited...come to find out, all because he quit paying his bill and Sprint shut off his service. ENOUGH! Not every customer is a good customer and Sprint needs to start adopting policies that drive these customers away. They take up too much time and actually contribute to a negative brand image. This guy was on the phone with Sprint Care when I left - tying up yet another Sprint channel. IMHO, his account should be cut off permanently and he should not be approved for another postpaid account.
• Rename Sprint to Softbank USA and be done with it - the brand is beyond salvaging.

 

I think the new CFO gets all of this, and much more...in fact, I think that's what's driving the $2 - $2.5 bil reduction in OE - I can't say it enough, that's the greatest move they've ever made (if it comes to fruition).

 

At this point, Sprint needs to spend more on network development and marketing - that's it. They just don't have money to spare on other things until they are once again (CONSISTENTLY) cash-flow positive! I'm excited that their current management team understands this. Lastly, they cannot be afraid to fire retail-level and CS staff if performance is not up to par...this is vital.

[Fraydog]

Not bad points, DanielB, but there's also the Ericsson elephant in the room. For far too long the network people under the Ericsson umbrella haven't been accountable. That has to change the minute that contract is up.

 

I know of maybe a few SprintShack's around me that got renovations, and the one I have seen is in Carbondale, hardly a strong bastion of Sprint service and customers. That money on the Sprint Shack in Carbondale could have been invested on network densification in market up in St. Louis where there's far more Sprint customers. It's a small sample size, I know, but I'd rather see the best Sprint Shack and Sprint corporate locations be consolidated and renovated. Nice, clean, new, modern stores have to be the rule. Up around STL, it seems like the other competitors in the market are running more modern stores.   That has to change. Value quality over quantity. Also have a much stricter enforcement of rules with resellers. The ideal is that you can't tell whether you're in a Sprint corporate store or reseller. 

[Rawvega]

The Sprint brand is tarnished, perhaps beyond repair. A rename may be prudent at some point, but SoftBank? No, just no. Anything that even remotely sounds like it's affiliated to the banking industry is still a non-starter imo.

[MacinJosh]

[*]Closure of "SprintShacks" (at least the Sprint portion) - what I'm hearing from several "Shack" managers is that they're just not bringing in any Sprint business

 

Stop right there please. If it wasn't for SprintShacks, I wouldn't have had a Corporate Sprint store to pre-order my iPhone 6s Plus from, not counting a place to go for help with billing issues, and a place to pay my Sprint bill. Plus, in Las Vegas, some of the Shacks are doing pretty well for Sprint business.

 

 

Sent from my Gold iPhone 6s Plus 128GB using Tapatalk

[DanielB]

(Still having a quoting issue with my browser...)

 

MacinJosh, fair enough. Perhaps some of them should be kept open...perhaps in exchange for outright abandoning many of the stores, Sprint can take over the "Shack" locations it wants entirely (like those in Vegas) from Standard General. I don't know. But the fact of the matter is, the effort is costly and does not appear to be producing a positive ROI on the whole.

 

^^ This is what shareholders care about.

 

As a consumer, I would understand your frustration with having your only local corporate Sprint store option taken away.

 

EDIT: Let me also add....With job cuts included in the $2-$2.5 bil OE reduction, one can deduce there are really only two areas of personnel to cut that make any significant difference in expense: call center and retail. This leads me to believe Sprint may already be thinking of getting rid of its SprintShacks. Again, I think the new CFO is leading much of this cost reduction effort. He has replaced the former complacency that was present in that role, and brought a new financial discipline to the company that is sorely needed at this particular stage. No, you don't want numbers guys making strategic decisions, but I have to imagine he is bringing insight to the fact that Sprint can really focus spending on only two areas right now (again, marketing and infrastructure). That's it.

[Ascertion]

Sprint shacks imo are a good idea. What I think is a colossal waste of resources is the Direct 2U service. I'm really doubting it's more productive than having a store. I mean you're literally driving to people and spending upwards to 2 to 3 hours with them. That's like 3 customers a day.

 

Sent from my M8

[DanielB]

Ascertion, I agree completely! It's a great, feel-good idea in terms of PR and winning over new customers who may be hesitant to make the move, but the expense of it worries me greatly. Further, it sets an expectation with each of these new customers that Sprint will hand-hold throughout the relationship, not just at setup - this is costly. I don't think these are good customers to bring on when evaluated in this light.

[EvanA]

Sprint shacks imo are a good idea. What I think is a colossal waste of resources is the Direct 2U service. I'm really doubting it's more productive than having a store. I mean you're literally driving to people and spending upwards to 2 to 3 hours with them. That's like 3 customers a day.

 

Sent from my M8

Direct2U is much cheaper than operating a full store, and obviously it's getting good returns or they wouldn't have continued to expand the service.

[MacinJosh]

Direct2U is much cheaper than operating a full store, and obviously it's getting good returns or they wouldn't have continued to expand the service.

Exactly! Direct 2 U is now available in my area. It's a very good program.

 

 

Sent from my Gold iPhone 6s Plus 128GB using Tapatalk

[Ascertion]

Direct2U is much cheaper than operating a full store, and obviously it's getting good returns or they wouldn't have continued to expand the service.

We agree to disagree. Sprint hasn't seen a profit in 8 years. Technically nothing they've implemented brings in profitable numbers for awhile now. While Direct2U is a neat service, and saves a few bucks to run instead of a store, it also limits the amount of customers it can service per day, which can be up to 10s of 1000s, nationwide.

 

Sent from my M8

[DanielB]

Here's a new way to look at it that may be useful for some...

 

An important metric on which I think Sprint will renew focus is cost per acquisition, or the amount of money it has to spend to acquire each new customer. On this measure alone, I think Direct2U will fail to pass muster when compared with other channels. Here's why...not trying to get too far into the finance geek weeds here, but humor me for a moment and consider that a retail store has a much higher proportion of fixed to variable costs. The opposite is true for something like Direct2U. This means that for every new customer served in a store, the average cost to serve (or cost per acquisition for new service) decreases. With Direct2U, the costs actually increase with each new customer serviced. Why? In addition to its higher proportion of fixed costs, a store has "levers," so to speak, that it can pull to make each business day as efficient as possible (for example, asking a customer to wait while their phone hard resets so the next customer in line may be helped). Contrast this with the fact that each Direct2U staffer is 100% tied up on just a single customer until that interaction has completed...there is no multi-tasking, or multi-servicing, as we nerds like to call it.

 

I'm sorry, folks...it's just not financially efficient. And Sprint needs financially efficient customer acquisition initiatives. At this stage, they must pursue must-have tactics to execute their strategies - not the nice-to-haves. And from a financial analysis perspective, chances are very good that Direct2U is a nice-to-have.

[DanielB]

Let me also add...on the face of it, Direct2U is not a bad idea. It's a great idea actually. There are many benefits to having your brand plastered all over cute cars driving around major metros all day, and there are some long-term benefits to such a hands-on customer service approach, for sure. But for the reasons I have highlighted above, it's not a good (or great) idea for Sprint at this time.

[nick]

Here's a new way to look at it that may be useful for some...

 

An important metric on which I think Sprint will renew focus is cost per acquisition, or the amount of money it has to spend to acquire each new customer. On this measure alone, I think Direct2U will fail to pass muster when compared with other channels. Here's why...not trying to get too far into the finance geek weeds here, but humor me for a moment and consider that a retail store has a much higher proportion of fixed to variable costs. The opposite is true for something like Direct2U. This means that for every new customer served in a store, the average cost to serve (or cost per acquisition for new service) decreases. With Direct2U, the costs actually increase with each new customer serviced. Why? In addition to its higher proportion of fixed costs, a store has "levers," so to speak, that it can pull to make each business day as efficient as possible (for example, asking a customer to wait while their phone hard resets so the next customer in line may be helped). Contrast this with the fact that each Direct2U staffer is 100% tied up on just a single customer until that interaction has completed...there is no multi-tasking, or multi-servicing, as we nerds like to call it.

 

I'm sorry, folks...it's just not financially efficient. And Sprint needs financially efficient customer acquisition initiatives. At this stage, they must pursue must-have tactics to execute their strategies - not the nice-to-haves. And from a financial analysis perspective, chances are very good that Direct2U is a nice-to-have.

of all the times i have visited sprint stores, or best buy mobile i have never, not once seen a store member move on to the next person while a phone resets, it's not a good customer experience... when your phone is done restarting the CSR is faced with a choice, abandon the new customer he just started helping, or ignore the person who just had their new phone restart untill he is done with the new guy... this strategy is fine if your a tech in the back room, but not if your the guy sitting face to face with customers.   another thing to consider is the hours upon hours that the store reps sit idle because the store is dead, they could have zero customers for hours then get rushed at 5:00 when everyone gets off work, that also creates bad experiences.  With direct 2 you the employee could be scheduled for appointments all day long leaving no down time (unless you count driving) but the driving is adding value for the customer by way of them not having to drive and improving customer service.  financially for direct 2 you to work, they need as many customers as possible (to keep the employees busy at all times)  and for those customers to be within the smallest radius possible to reduce driving time.  of course you have more variables like running over the 45-60 min target time frame, or customers that fail to meet for the appointment, forcing the driver to either wait wasting time, or try and bump his next appointment earlier, or fine one to take the place of the missed one.   

 

I think in a perfect world all reps would be in a car, or online only eliminating the retail space would save a ton of money, but that would be to extreme for people, there is nothing that a store offers that the car or online/ phone could not. 

[DanielB]

Nick, was just an example bud. There are many efficiencies that can be had in a store that cannot be had in a one-to-one environment. That's my point. I grant that the average person does not understand the difference between fixed and variable costs and why that is so important here...but trust me when I say it is.

 

You bring up Best Buy Mobile and that, my friend, is where I think the most opportunity for a carrier like Sprint lies. They offload most of the acquisition costs to the third-party retailer and what remains can be paid to the retailer as an incentive for the production of a new customer. Almost a win-win for everyone involved. I've seen a lot more Sprint Reseller stores pop up in my area over the past 6 months, so it seems to be a strategy they are going to employ pretty widely (at least in some areas).

[S4GRU]

I don't expect a lot of retail cuts. Retail cuts have to be applied in a precision manner because if done wrong, they limit the avenues that growth can come from.

 

I expect the cuts to come from non revenue generating jobs. Call centers is a good example. But I also expect a lot from the corporate office. All jobs are indirectly revenue generating. But I think the ones that are directly revenue generating are safe this time. Including under performing Sprint Shack stores. I think the data is too new on those to make big rash decisions.

 

Using Tapatalk on BlackBerry Z30

[DanielB]

I hope you're right. Were Sprint in a better financial position, my regard for the Sprint Shacks would change as much as it would for the Direct2U program. But here's my concern....my understanding from what I've been told is that the KC HQ is already operating pretty lean - didn't think Sprint had too many additional back-office jobs left to cut?

[S4GRU]

I hope you're right. Were Sprint in a better financial position, my regard for the Sprint Shacks would change as much as it would for the Direct2U program. But here's my concern....my understanding from what I've been told is that the KC HQ is already operating pretty lean - didn't think Sprint had too many additional back-office jobs left to cut?

Really? I've always heard the opposite. I once heard it said that Sprint has nearly double the corporate overhead staff as Tmo. But I've never verified that info before.

 

Using Tapatalk on BlackBerry Z30

[DanielB]

Wow, that would be quite a difference if true. In all fairness, I cannot vouch for the accuracy of my sources. If that's the case, then definitely cut away!