It's All Sprint's Fault
Yep, there seems to be a new competition amongst vendors and retailers: Pin the poor earnings report on struggling cellular operator.
This morning, RadioShack Corp. got into the game in a big way, fingering Sprint for a $43.3 million drop in sales quarter-on-quarter for the first three months of the year. The retailer said the drop was "mainly driven by lower sales in Sprint postpaid wireless."
The shout-out from the 'Shack (OK, no one really calls it that) neatly encapsulates Sprint's big problem: It is losing more profitable monthly subscribers and struggling to add new users. Its bigger rivals, AT&T Inc. (NYSE: T) and Verizon Wireless , each typically add more than a million customers a quarter. Sprint predicts it could still lose over a million monthly customers in the first quarter of this year. (See Wireless Pumps AT&T's Q1 and Wireless Fuels Verizon's Q1.)
Who else is playing the Sprint blame game? How about Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), which said lower spending in North America accounted for its disappointing second-quarter outlook. (See Wireless Slowdown Hits Tellabs.) The vendor never specifically named Sprint but said that the fact that "one North American [operator] is experiencing some strife at the moment," is having an impact on its sales. Indeed, Strife is Sprint Nextel's middle name at the moment. (See Sprint Still Silent on WiMax Launch, Sprint Reports Q4, Qwest Not Satisfied With Sprint, Clearwire & Sprint: On Again?, Sprint Nextel's New Broom, Sprint to Cut 4,000 Jobs, and 2007 Top Ten: Sprint Shockas.)
Even cozy ol' Qwest Communications International Inc. (NYSE: Q) has put the boot in recently. Last February, Qwest CEO Ed Mueller told analysts that he was looking to expand upon Qwest's reseller agreement with Sprint after intimating that he wasn't satisfied with the current arrangement, which expires during the first quarter of next year. (See Qwest Not Satisfied With Sprint.)
Last week, meanwhile, it became obvious that the Pivot wireless joint venture between Sprint, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and other cable companies was not going to make it. "It was tough for the Sprint folks to sell, and for us to service," Time Warner Cable Inc. (NYSE: TWC) spokesman Alex Dudley told Cable Digital News. (See MSOs Pivoting Away From Sprint JV.)
Beyond that, Sprint is bogged down with its own problems. The much-vaunted launch of its nationwide WiMax network has been delayed due to backhaul problems. Early commercial services are now expected to start around summertime, according to some analysts. (See XOHM May Launch This Summer.)
The RadioShack earnings report also underlines what Sprint has already said about continuing subscriber losses. We'll find out the full truth about the subscriber numbers on May 12, when Sprint reports its first quarter numbers.
— Dan Jones, Site Editor, Unstrung