Sprint Nextel agrees to $57.5M settlement

Sprint Nextel Corp. has proposed a reported $57.5 million settlement to a lawsuit bought by shareholders who claim the carrier cut them out of billions of dollars when it combined its wireline FON and wireless PCS stocks in early 2004.
The Associated Press reported that Sprint Nextel, which has admitted no wrongdoing in the case, would pay $10 million and insurance would cover the remaining $47.5 million.
According to court records, the settlement has received preliminary approval from Johnson County District Judge Kevin Moriarty, but still must receive final approval. A settlement conference is scheduled for mid-December.
The suit claimed Sprint Nextel used the recombination of the tracking stocks to boost its bottom line at the expense of common shareholders.
At least half a dozen lawsuits were filed at the time the stocks were recombined; the separate claims were eventually allowed to proceed as a class-action suit against the carrier. FON and PCS began trading separately in 1998.
Meanwhile, Sprint Nextel announced a legal victory over Vonage Holdings Corp. A jury found that Vonage violated Sprint Nextel’s patents for voice-over-packet technology, a ruling that includes a $69.5 million payment for damages and a 5% royalty rate on future revenues.
The news comes shortly Vonage lost a similar case to Verizon Communications Inc.