Sprint Nextel Corp. (NYSE: S) was the worst telecom merger in recent memory. The $35 billion merger in 2005 was intended to keep Sprint from becoming a smaller player in the wireless market as competitors were combining and becoming wireless powerhouses.
The only problem was that Sprint and Nextel merged but appeared to keep everything separate. In effect, very little "merged" at all.
After a write-down of about $30 billion for the merger's cost already in the last year and a loss of millions of customers in the last two years to the competition, a class-action suit has sprung up to try and cover anyone who purchased Sprint Nextel stock between the end of 2006 and the beginning of 2008.
The impetus of the lawsuit? The merger was so disastrous, with such a complex array of technical problems and customer service issues, that the mere fact millions of customers were lost due to these issues caused harm to the investor.
Also, Sprint Nextel officials are charged with keeping the truth from investors by using misleading public statements about integrating the two companies in an effort to keep the stock price from falling further.
The suit, which is attempting to force Sprint Nextel into confessing to public lies during its quarterly results mostly throughout 2007, said that "As a result, the Company's projections issued during the Class Period about its earnings for 2007 and 2008 were at a minimum reckless."
If you have recently owned Sprint Nextel shares, what do you think? After seeing how financially disastrous the merger was and watching the stock's price over the last three years fall from near $20 to below $5 today, do you feel slighted?
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