Sprint's Cold Call Quarter
The Reston, Va.-based carrier reported a loss of $211 million, or 7 cents a share, for the quarter that ended March 31. In the same quarter last year, it made a profit of $419 million.
Sprint said that, excluding one-time charges and amortization costs, it would have made 18 cents a share. Thomson First Call had been anticipating 22 cents a share. Revenues for the quarter rose slightly to $10.1 billion from $10.07 billion a year ago.
The company's CEO, Gary Forsee, blamed the loss on spending to improve call quality and coverage on the carrier's CDMA and iDEN networks. Sprint has been losing high-value monthly bill-paying customers dissatisfied with network performance; the company lost 220,000 postpaid customers during the three-month period.
"In the first quarter we continued to strengthen our network quality with nearly 1,400 new cell sites coming on air," Forsee said on the conference call.
Overall, Sprint added nearly 600,000 net wireless subscribers, but many of these signed onto its cheaper Boost pay-as-you-go service or wholesale channels. Third-place Sprint is now lagging Cingular and Verizon in the customer acquisition stakes by a sizeable margin; the two largest carriers both added over a million new users in the same quarter.
Sprint is hoping that the operational spending on network quality will help to turn that picture around later this, even if it hasn't had much impact yet. The company once again reiterated its prediction that postpaid customer numbers will begin to rise in the second quarter.
The company also repeated its prediction of yearly revenues between $41 billion and $42 billion. Analysts are predicting sales of $41.4 billion in 2007. One bright spot in a dark and gloomy quarter for Sprint was the amount of money it earned from customers using its CDMA data services. Sprint Nextel’s postpaid average revenue per user (ARPU) is $59. The company makes over $12 a month on its CDMA user's music and email downloads and picture and text messaging activities.
On the technology front, The firm didn't add much to what it has already said about its WiMax launch plans. "We also continue to make solid progress toward the deployment of our WiMax broadband network. We are on track to launch WiMax in Washington, D.C., and Chicago in late 2007 and to be in more than 20 markets by the end of 2008," Forsee said on the call.
Despite the downbeat quarterly report, Sprint was up 66 cents -- over 3 percent -- during the day's trading on hopes of the promised turnaround in the second quarter.
— Dan Jones, Site Editor, Unstrung