Sprint Nextel Corp., the No. 3 U.S. wireless service provider, said today it had a larger first-quarter deficit as revenue fell, it lost more than a million subscribers and it absorbed charges for severance and other costs.
Sprint said its total subscriber base fell by 1.09 million to 52.8 million, including the loss of 1.07 million post-paid customers who pay a monthly bill - actually smaller than the 1.2 million in post-paid losses the company had forecast last quarter.
The company reported a wider loss as customers defected to larger rivals and forecast only marginal improvements in the current quarter. Sprint reported a loss of $505 million, or 18 cents per share, in the three months ended March 31 compared with a loss of $211 million, or 7 per share, during the first quarter of last year.
Revenue fell 7.5 percent to $9.3 billion from $10.1 billion a year earlier.
During the first quarter, Sprint introduced a $99.99 plan that provides unlimited voice and data services, undercutting by price its chief rivals AT&T Mobility and Verizon Wireless' similar unlimited plans.
"As expected, our Wireless business delivered weak financial results. While the business will continue to face challenges in the short term, we are making progress in methodically attacking the sources of our performance issues," said Dan Hesse, Sprint Nextel CEO. "We have strengthened our hand with last week's 4G announcement, which captures and leverages the value of Sprint's sizable spectrum holdings, provides Sprint with additional financial flexibility, gives us a time-to-market advantage over our competitors in the important growth area of wireless broadband, and allows Sprint management to focus our resources and attention on improving the performance of our core business.
Last week, Sprint and Clearwire resurrected plans to offer high-speed mobile Internet service. The two companies will combine their wireless broadband units to create a $14.55 billion communications company, to be called Clearwire, that will continue developing a mobile network based on WiMax technology.
Sprint Nextel Corp. lost $505 million in the first quarter, more than doubling its loss of $211 million during the same period a year earlier, because of wireless subscribers spending less or leaving.
The results meant a loss of 18 cents a share, compared with a loss of 7 cents a share during the first quarter of 2007.
The Overland Park-based wireless carrier (NYSE: S) posted revenue of $9.33 billion for the quarter that ended March 31, down 7.5 percent from $10.09 billion during the same quarter a year earlier, according to a Monday release.
Earnings fell short of analysts' predictions. Twenty-six analysts surveyed by Thomson One Analytics had predicted first-quarter earnings of 2 cents a share, and 23 analysts had predicted revenue of $9.41 billion.
Because of the downward earnings trend, Sprint said it will continue looking at cost-cutting measures, including job cuts.
Last week, Sprint announced internally a new senior organizational structure. Some senior-level jobs will be cut in an effort to remove layers from that level of the company and increase the number of people reporting directly to CEO Dan Hesse, spokesman James Fisher said Monday. He said he didn't know how many jobs would be cut. Any further cuts to the employee base at large will depend on the company's performance, he said.
Sprint also said in the release that it is weighing disposing of noncore assets and other measures to improve its finances.
The Wall Street Journal has reported that Sprint is considering selling or spinning off its Nextel division. The company bought Nextel Communications Inc. in 2005 for about $36 billion.
Customer defections and a drop in average revenue per customer led to an 8.7 percent drop in wireless revenue to $7.96 billion for the quarter, compared with $8.72 billion during the same period a year earlier.
The company lost 1.09 million wireless subscribers, including 1.07 million post-paid subscribers and 543,000 traditional prepaid users. The losses were partially offset by gains of 343,000 Boost Unlimited and 183,000 wholesale and affiliate subscribers.
Post-paid subscriber additions were hurt by lower gross additions and higher churn, or customer loss. Sprint ended the quarter with 52.8 million wireless subscribers.
Wireline revenue rose 2 percent to $1.63 billion, compared with $1.6 billion during the same quarter a year earlier.
"As expected, our wireless business delivered weak financial results," Hesse said in the release. "While the business will continue to face challenges in the short term, we are making progress in methodically attacking the sources of our performance issues."
Quit Troling. sprint already said this would happen months ago. we'll see who has the last laugh when sprint is the first to launch a 4g network, when everyone else will be 4 years behind.
3. Posted by Shalalala
Wed May 14, 2008 1:25 pm
Quit Troling. sprint already said this would happen months ago. we'll see who has the last laugh when sprint is the first to launch a 4g network, when everyone else will be 4 years behind.
Yeah sure, like that'll happen. Shame Tmo will be buying Sprint too.
4. Posted by McGirk
Thu May 15, 2008 9:20 am
True, it's unlikely that Manator will quit trolling, especially after all the crap you are posting all over the place about how awesome Sprint is. Sprint is hurting, yes, purchasing Nextel was a stupid move, but they are turning around, and their stocks are creeping up on double it's 12month low. Please Manator, stop turning every Sprint thread into a DTelecom buyout. It really is unlikely, and even if they did it would be the dumbest move they could make, if you work for them, I would hope that it would never happen. Just ask the 4000 Sprint people who're about to get layed off if they think purchasing a company with a different technology is a good thing.
5. Posted by IOWA
Sun May 18, 2008 11:36 am
What I think is funny is when we get a real president in office and he kills all of att's sweetheart deals. ATT is crying like a baby right now becuase they are changing laws and it will cost ATT tons of money to conform to the law.
6. Posted by man1234
Sun May 18, 2008 6:13 pm
my family member with AT&T warns me every time they go on a major highway -- "im going to lose you soon, im on the highway & im between lots of trees"
and while they are saying that, their voice is going in and out . LOL
---just saying
7. Posted by McGirk
Mon May 19, 2008 8:59 am
iowa, stop giving the Presidency power it does not have.
8. Posted by McGirk
Tue May 20, 2008 9:05 am
In a bold move of conformity, Sprint has reduced it's unlimited data access plans to 5gb (300mb roaming) instead of truly being unlimited. Once again Sprint has reduced how much band you get for your buck to keep up with Verizon and At&t. Thank you Sprint, I was agonizing over whether or not to cancel my home service and DSL to switch to an air card, now I clearly cannot, I and my wife do WAY too much over the internet for just 5gb.
9. Posted by IOWA
Sat May 24, 2008 4:40 pm
Dear God Sprint. Bad Move. time to fire up the complaint department, unless this is some wierd strategy to boost wimax?
10. Posted by Rob5
Mon May 26, 2008 4:39 pm
bad move on sprints part buying nextel.its probably going to continue loosing customers until they either release a 4g network or are bought out
11. Posted by McGirk
Tue May 27, 2008 9:23 am
You know it isn't a bid to boost WiMax. Sprint has a tendency to raise it's prices and decrease it's offerings to keep up with Verizon and At&t. If it isn't hurting the big two, then Sprint can 'save' some money and provide the same service.
Post a comment and discuss this story with other readers.
