iphone-5-sprintBy now you have all probably heard the BGR exclusive stating that the iPhone 5 will be launched to Sprint first and then to AT&T and Verizon, who already have an iPhone program with Apple, in 1st quarter 2012. The Wall Street Journal has reported that Sprint has agreed to pay Apple 20 Billion Dollars over the next 4 years for an iPhone deal. This is a deal where Sprint has to make the program work until 2014 to even start seeing any money from their partnership with Apple. That alone is an incredible risk on Sprints part, but what the WSJ did not report is what BGR is speculating that could make this deal a little sweeter to Sprint, but smell like excrement to the rest of us.

What BGR is speculating is that Sprint’s 20 Billion is also buying them an exclusive on the iPhone 5 for 2 months. Sprint would launch it shortly after the announcement tomorrow, and then Verizon and AT&T, you remember them, the two larger wireless carriers that sell a metric excrement pile of iPhones would get it 1st quarter 2012. What version of the iPhone the two carriers would get, would be a revised version of the iPhone 4, called the iPhone 4S at launch. Stating that this version would have the A5 CPU, hopped up cameras, NFC, and a different back case. The iPhone 5 that would go to Sprint would have the larger 4 inch screen, faster CPU, more memory, and even some exclusive software.

I learned from and early age that money talks and excrement walks, but this deal smells bad no matter how much money is tied to it. We have been talking about it all day, let’s see what all you think. Drop a comment.


  1. I maintain that it’s total bull, but in case I’m wrong, I’m not switching to Sprint. I’ll just get both (4S for me until the 5 comes out and then the 4S will goto the wife)

  2. Maybe Gartner has a source for this rumor too…and that’s why WP7 stands a chance of overtaking the iPhone in two years:)

  3. You know what these crazy-sounding you-can’t-make-this-stuff-up rumors from “trusted sources” do regarding tech stuff like this? It gets websites heavily trafficked for a day or two and it gets consumers making noise and getting thirsty to stand by for the announcement and eventually buy the thing.

    Forget the exclusivity rumor, let me try to understand the deal itself. I am not a finance guy, I don’t even know how to put an Excel formula together, but I’m gifted in fuzzy math.

    So, a $20B four year commitment according to BGR citing the WSJ. I take it they don’t have to put that in escrow? Sort of a gentleman’s agreement? How does that work? They’ve got less than five billion in cash which is about how much money they lose every year (recent exception to 2007 when they lost $30B).

    As for their current assets, they claim they have $9.18B that they could liquidate within a year. As for their current liabilities for which they are on the hook to pay within a year, $8.63B. That’s a 1.06 current ratio.

    At the current rate they’re hemorrhaging dough (cash flow of -1.2B for the first half of the year) it will take them only a few months to burn the current ratio down to < 1 /retrospectively/ looking at their June quarterly. You generally don't want to be below one on this particular ratio. Same with your quick ratio, best to keep that above one in case you need to extinguish liabilities in a hurry. Sprint's quick ratio fell to 0.93 by June. Looking at the numbers the picture they paint in my mind is virtual insolvency with almost no hope of turning it around. It's bad for business, being insolvent. So what the hell is Sprint doing making a $1.25B per quarter deal like this? Is this whole thing a joke? Aren't they down to their bankruptcy consultant change? It's not even a bloodbath -- they had to sell the bathtub to make payroll. The blood's container is the actual bathroom. Evan, you seem vaguely intelligent and with the program in general -- could you please explain this to me? In other news, Sprint fell over 10% today, almost a billion dollars.

  4. Sounds like balderdash to me.

    But then again, I can’t *honestly* say i give a “pile of rat excrement” one way or another. :-/

  5. You know, this is neither here nor there Sean but if you think about it, which is my whole point, substituting a word like excrement for the four letter word everyone who can (and cannot) read knows the actual commonly-used idiom to contain makes one think about the actual idiom, when reading the substitution, with greater intensity than he otherwise would had it been made traditionally using the four letter word which creates a greater net effect of vulgarity, therefore making this curbed language doctrine a bunch of horseshit.

    Sean, your thoughts?

  6. Maybe the plan is for Sprint to default on the deal, giving Apple its own wireless service. That way Apple doesn’t have to bid for it.

  7. Impressive Ike. I was about to think of that.

    Can a public company default on a single obligation like this, surgically, without declaring bankruptcy, one chapter or another for the purpose of getting absorbed into a company of their choosing; and if the deal is huge enough, as in double the company’s market cap, that other company has dibs on the whole thing or does it all have to get split up to all the creditors, a process which can take years? Seems like kind of a schlep. And if this is a smarter move than a conventional takeover, why don’t we see it regularly?

    I just think that Apple’s big enough and doing too well that adding this to their plate, taking control of Sprint, is just too much. One bit of Apple’s MO is that at any point they can fit all the products they’re currently selling on a boardroom table, something like that, so why distract themselves with too much chaos just as they know not to distract their consumers..

    Anyway, four hours on the clock. Much more interested in how this Tim Cook will fair than whatever it is he’s going to announce. Guess I’ll add a poll to that effect.

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