Sprint Nextel Corporation (NYSE:S)’s stride too short to close loss-gap

Posted by Kristi Scott July 30, 2013 0 Comment 1063 views

The third-largest wireless carrier in the United States, Sprint Nextel Corporation (NYSE:S) reported a higher-than-projected loss. This has been attributed to the more than 1M monthly-subscribers that the company bled post the Nextel Network closure. In a statement, Sprint said that the Q2 loss was $1.6B or 53 cents/share. On an average, analysts had estimated that the loss will be in the range of 31 cents/share.

This month, Softbank acquired Sprint for $21.6B and the latter shutdown its outmoded Nextel network on 30 June. This move boosted depreciation expenses and the company had to spend more money to axe all their back-haul access contracts. This added costs of 21 cents/share. The carrier will now be channelizing all its energies on building a speedier network utilizing the Long Term Evolution (LTE). This will set it on the right path to countering the threat from larger rivals like AT&T and Verizon Wireless.

Earnings report

There was no change in Sprint shares at Monday’s trading and they closed at $5.74. Despite the massive subscriber losses that it faced due to the Nextel shutdown, S managed to garner additional revenue per customer, which helped its sales top projections. On an average its customer phone bill rose to $64.20 from $63.38 that it stood at in the same period, a year earlier. The average analyst projection had been $63.69. Sales rose by 0.4% from the same period in 2012, to $8.88B which topped the average analyst estimate of $8.73B. The company also said that it had sold 1.4M iPhone units.

The acquisition

In this quarter, Sprint also acquired the remaining stake in Clearwire. This acquisition will give the company the much-needed spectrum to expand and enhance its network. In a bid to outshine its rivals, this month, Sprint launched a guarantee-pledge that gives Sprint users unlimited-service as long as they stay with the company. S seems to be heading in the right direction, but it needs to quicken its pace.

About Kristi Scott

Kristi Scott joined GDP Insider in 2005 as a Wall Street reporter for the Business and Market section. Kristi covers the stock market, financial markets and personal finance. Her awards have come from the National Federation of Professional Writers, the Ohio Newspaper Association, the Cleveland Press Club, the Society of Professional Journalists and Suburban Newspapers of America. Kristi was named SNA's national Journalist of the Year

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