Not that long ago, Nextel was a shining star in the wireless industry.

Lately it is being treated more like a dangerous exploding supernova.

The potentially dynamic duo created by bolting together Sprint and Nextel a few years ago generated excitement on Wall Street. Many analysts said the company would be the one to beat in the wireless industry.

Today, obviously, that Nextel star has dimmed considerably. Sprint started the year by announcing a $29 billion write off to reflect the declining value of the Nextel purchase.

The Nextel side of the company lost 2.8 million customers on monthly calling contracts just in 2007.

News that emerged in the Wall Street Journal Monday indicating that Sprint CEO Dan Hesse is at least thinking about jettisoning Nextel is drawing some interesting reactions.

William Power, an analyst at Robert W. Baird & Co., wrote in a report today: “Though untangling the back-office integration that has been under way for the past three years would be challenging, the company still operates two separate networks. Net - given that the Nextel business has been responsible for the bulk of the subscriber losses over the past few years, this could be viewed positively.”

Tom Watts at Cowen & Co. issued an upgrade on Sprint shares after weighing the chances of action emerging from all the rumors swirling about the company. Out of the possibilities of a Deutsche Telekom takeover, a sale or spin-off of Nextel or a WiMax joint-venture involving Clearwire and cable companies, Watts gives “highest probability” to a WiMax deal.

But he also views an undoing of the original Nextel deal as highly likely.

“Investors have long been asking for a sale of Nextel,” Watts wrote.

Sprint lost a big court case last week that gives the Federal Communications Commission the go-ahead to bring the hammer down on the Nextel network. The company is involved in a massive project to eliminate interference between the Nextel network and radios used by police and firefighters. Sprint leaders say they are hopeful a compromise can yet be worked out, but also have said that the possible FCC actions could cripple the Nextel network.

When Sprint purchased Nextel, the company brought nearly 17 million subscribers to the merger party. By the end of 2007, Nextel had about 13.2 million, Cowen wrote.

“The company is set to lose (7 million) more Nextel subscribers over the next few years, a decline which could continue to depress Sprint’s outlook,” Watts stated.

Integrating Sprint with Nextel has been a massive undertaking and the company does appear finally to be making great progress. Unwinding would be far from easy, though, in the view of Christopher King, an analyst at Stifel Nicolaus, it might make sense to try.

“It will be very complicated to do,” King told me. “If they can do it, it certainly makes some sense.”

CNET has a report that joins the chorus of those who think it would make sense to dump Nextel. "The spin-off of Nextel would finally cement the $35 billion tie-up between Sprint and Nextel as a major failure. Sprint would likely only get a fraction of what it paid for the company if it sold it today. But dumping Nextel would make it easier for Sprint's management team to more nimbly direct its core PCS business. It might even give executives room to focus more attention on its next-generation WiMax network called Xohm."