Sprint claims that despite this activity and the movement within the stock market due to the announced sale and subsequent cancellation, the company remains in solid financial shape.

In fact, the company’s debt weakened on the news and its 6 percent bond due in 2016 widened 42 basis points. The debt costs have jumped according to MarketAccess, from roughly 3 percent at the beginning of 2008.

According to at least one trader however, the cost to insure Sprint’s debt with credit default swaps rose approximately 35 basis points to 360 basis points, or $360,000 per year for five years to insure $10 million in debt on the news. 

The cancellation does not mean the end of merger and acquisition talks for Sprint. In fact, according to Walter Piecyk of Pali Research, the sale of iDEN, the Nextel portion of Sprint’s network, is inevitable. Once this is complete, the next natural step is the sale of the rest of Sprint.

For those who don’t want to see the No. 3 mobile phone service swallowed up by other large wireless providers, the possibility for a Google purchase is appealing.

The challenge is that Sprint’s financial situation – no matter what its representatives claim – is not strong. It isn’t any secret that the company has been struggling with lost revenue and lost customers. While Google could in effect turn it around, the real question is – does it want to take on the role of savior where Sprint is concerned?