It looks like Sprint's (NYSE: S) 2005 merger with Nextel Communications will end the way that a disturbing number of mega-deals end: with a massive write-off.Sprint announced yesterday that it may write off as much as $31 billion related to the deal -- a move that could eliminate all the goodwill the company recorded for the merger.
The write-off would be far larger than the headline-making subprime-related moves that derailed shares of the major banks. But shares of Sprint didn't budge on the news.
Why? It's already well-known that the Nextel deal was an unmitigated disaster. The goodwill may still be on the balance sheet but it has no value. It's an asset that everyone has already written off mentally.
Sprint said that the charge wouldn't affect the company's cash position or effects its deals with lenders.
The deal for Nextel cost Sprint $35 billion, meaning that the company completely wasted at least $34 billion of that amount, and everyone can already tell less than 3 years after it went down. That has to make it one of the worst M&A moves in history.
Hey, at least they didn't buy WorldCom.
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