Wireless industry and mobile-related stocks were hardly immune to the massive sell-off that saw the Dow plunge 635 points, or 5.6%, on Monday. Among the major U.S. wireless operators, Sprint appeared
to be hardest hit by the stock slide following the first-ever downgrade of the federal government's credit rating last Friday by Standard & Poor's. The carrier's stock plummeted 15% to just over $3 on
Monday, compared to a slump of 5.5% for Verizon and AT&T's downward slide of 1.5%.
As the nation's third largest carrier, and far smaller than its two larger rivals, Sprint is perhaps
more vulnerable to the kind of dramatic downturn that sent investors fleeing to less-risky investments than stocks, including Treasury bills and gold. Sprint last month reported a wider loss in the
second quarter of more contract customers than expected, despite adding 1.1 million net new customers overall.
For AT&T, the nosediving stock market and increasingly uncertain economy
could have a silver lining if these factors help the company's proposed acquisition of T-Mobile USA. As the smallest of the four largest U.S. carriers, T-Mobile has argued that it won't survive
without the AT&T takeover. It lost 50,000 customers in the second quarter, out of a total of 150,000 so far this year. Having T-Mobile's business and financial standing weaken in the coming months
could actually improve the merger's prospects.
For prepaid carriers like MetroPCS and Leap Wireless International, Monday's stock only added insult to injury. Both companies saw their
shares fall more than 30% last week, after each reported disappointing results for the second quarter. Leap dropped roughly another 3% today, to $6.27, while MetroPCS was down more than 6%, to $8.92.
If the sell-off is any indication of where the economy's headed in the second half of the year, it could make it that much harder for these prepaid services to regain momentum.
Even
Apple's iPhone-powered stock has been taking a beating lately, falling 5.5% Monday, to $353. Only a week ago it was trading close to $400. When Apple takes a hit like that after posting another record
quarter last month, it's clear the entire mobile sector will have to brace for more volatility during the rest of the year.