(S) Sprint Nextel Ventures Safe Browsing

The third-largest U.S. wireless carrier Sprint Nextel Corp. (S) has inked a deal with Lookout Mobile Security, a software company that specializes in smartphone security.

The deal draws attention to Sprint’s attempt to ensure safe browsing on mobile devices. The company is trying to secure mobile phones with features like privacy, backup and restore, tracking missing devices and remote link and wipe.

Important information stored in the Google Inc.‘s (GOOG) Android-based smartphones or tablets will also be safeguarded from privacy invasion, financial fraud and emerging mobile threats, including malware, spyware and malicious websites.

The demand for mobile data security is growing by the day, especially with the rollout of mobile payment and banking solutions. Sprint is expected to benefit from increased penetration of smartphones, rising average revenue per user and lower churn in the post-paid wireless segment.

Last week, Sprint announced plans to launch 10 new wireless devices (smartphones and tablets) in collaboration with Motorola Mobility Inc. (MMI). The company also announced the launch of a 4G handset “HTC EVO 3D” and a 4G tablet “HTC EVO View 4G.”

While wireless data is likely to drive revenue in the coming years, Sprint turns to a wholesale agreement with Clearwire Corp. (CLWR) for data strategy. The company owns a 49.9% stake in Clearwire and offers speedy data services to customers via 4G WiMax (a wireless broadband technology) in collaboration with the latter.

Given wireless penetration of more than 95% in the U.S., the company’s top and bottom-line results could remain under competitive stress. Sprint faces stiff competition from AT&T Inc. (T) and Verizon Communications (VZ) in gaining market share. Additionally, Sprint’s business may be at risk with the proposed AT&T/T-Mobile merger, as it will increase rivalry among the top three U.S. wireless operators.

Thus, expansion of 4G services is vital to Sprint’s survival in the U.S. wireless market. But while Sprint will retain its primary focus on 4G networks, other major carriers will also buckle down to tap 4G prospects. Verizon’s 4G network already covered approximately 38 markets with around 110 million people as of year-end 2010. AT&T also plans to roll out its 4G services this summer.

Further, Sprint is a loss-making entity and heavy investments as well as continued wireless margin pressure may keep the stock range bound in the near term.

We are currently maintaining our long-term Neutral recommendation on Sprint. The stock also retains a Zacks #3 (Hold) Rank for the short term.

CLEARWIRE CORP (CLWR): Free Stock Analysis Report

GOOGLE INC-CL A (GOOG): Free Stock Analysis Report

MOTOROLA MOBLTY (MMI): Free Stock Analysis Report

SPRINT NEXTEL (S): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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