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Bernstein Research analyst Craig Moffett downgraded his rating on Sprint stock to underperform, along with a note that says bankruptcy is a very real threat with the LTE iPhone looming.

We believe an LTE iPhone will likely be badly disadvantaged on Sprint’s network, potentially impairing sales … at a time when Sprint is subject to a punishing take-or-pay deal with Apple. The problem is 4G. Sprint doesn’t have enough free-and-clear spectrum on which to launch a competitive LTE network, and it doesn’t have the money to clear spectrum that’s already in use. ... To be clear, we are not predicting a Sprint bankruptcy. We are merely acknowledging that it is a very legitimate risk. And notwithstanding a recent rally in Sprint shares, we believe that risk is rising.

As you might recall, rumor has it that Sprint basically bet the farm on the iPhone 4S, but considering how much T-Mobile is hurting without it, who can blame them? Sprint's LTE rollout was supposed to be kicking off this year, but if their 4G network isn't reasonably matured by the time an LTE-capable iPhone is announced, they may be in trouble. One can only presume that most of the money AT&T forked over for the failed merger went to those kinds of network upgrades.

It's worth pointing out that while Sprint currently offers the CMDA iPhone 4S, they didn't get the new iPad last week like AT&T and Verizon did. Not on LTE. Not even on CDMA.

Anyone taking bets? Will Sprint be able to keep their network up to snuff for the LTE iPhone, or do AT&T and Verizon have too much of a head start?

Source: AllThingsD