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