Dear Mr. Berko:

Why is Sprint stock doing so poorly? Do you think this is a good stock to buy as a long-term investment, because it hasn’t gone up like other phone stocks? I’d consider owning 400 shares if you recommended it. And what do you think of AT&T? I would like to own 200 shares. Do you think Cingular Wireless, which is the backbone of AT&T, will continue to do well? And can you tell me why Cingular seems to be doing so much better than Sprint’s wireless operation?

R.G., Durham, N.C.

Dear R.G.:

AT&T and Cingular are doing well because they have superb management, and AT&T Inc. (T-$39.33) is doing well because its wholly owned Cingular Wireless division has AT&T’s superb technology, immense resources and a smart, employee-friendly management team. As a result, Cingular, which generates about 35 percent of T’s annual revenues, has become the largest wireless carrier with the deepest spectrum portfolio of any carrier in the nation’s largest markets.

Cingular, the 800-pound gorilla, now has the resources to roll out new services quickly and enter new markets with a flick of a switch with minimum costs. Ma Bell’s new baby (T now owns 100 percent of Cingular) is increasing its revenues at 10 percent to 12 percent annually and seems to be the carrier of choice.

Poor Sprint Nextel Corp. (S-$19.27), which pays a stinky 10-cent dividend, just can’t get its derriere   out of the starting block. Gary Forsee, Sprint’s chief executive officer, appears a little confused, especially in light of the fact that takeover rumors are swirling around Sprint due to his feckless performance. Sprint’s earnings over the past few years have been magnificently disappointing.

Earnings for 2006 (34 cents per share) are down from 87 cents in 2005, and this year’s expected earnings of 84 cents will continue to give Forsee agita.

Meanwhile, AT&T CEO Eddy Whitacre Jr. is basking in the sunshine. Earnings for 2005 were $1.72 per share (a 21 percent increase from 2004), earnings for 2006 increased to $2.33 (a 35 percent increase), earnings for this year are expected to reach $2.61 and earnings for 2008 could exceed $3. And T’s $1.42 dividend yields a sweet 3.6 percent.   Cingular is one of AT&T’s most powerful growth engines, and its contribution to future profits and dividends is expected to be enormous.

I believe T is a grand long-term investment and over the next decade could give you better results than the other 29 issues in the Dow Jones industrial average. So without question, I’d own 200 shares.

I hope you don’t think I’m bonkers, but I’d also buy Sprint. Oh, I wouldn’t own Sprint as an investment but rather as a speculation. Two sources seem to believe that Forsee is looking for a face-saving exit and a parachute that will give him a soft landing. If Forsee is replaced, there’s little doubt in many minds that new management will have the right stuff to put some zip-a-dee-doo-dah in this operation.

I’d consider owning Sprint as a speculation, because the current takeover talk could become serious conversation in the next six months or sooner. The company’s stock trades 73 cents below its $20 book value with a salivating cash flow of $13 billion. Though this cash flow provides Sprint with the means to upgrade its WiMax broadband wireless, its iDen radio and code division multiple access networks, Forsee and his boys appear to lack follow-through capacity.

A buyout will take a record amount of capital, but records are being broken in this business every quarter.

Please address your financial questions  to Malcolm Berko, P.O. Box  1416, Boca Raton, Fla. 33429 or  e-mail him at malber@adelphia.net.  © Copley News Service