Income is down 94 percent as WiMax spending and other costs take their toll

Dan Jones, Mobile Editor

August 8, 2007

2 Min Read
Sprint's Profit Dive

Sprint Corp. (NYSE: S) says it spent $51 million on WiMax during the second quarter of this year in preparation for a nationwide launch in April 2008.

That figure helped contribute to a 94 percent earnings drop for the quarter, the company said today. The carrier made a profit of $19 million on $10.16 billion in revenue in its second quarter, which ended June 30, down from income of $370 million on revenue of $10 billion a year ago.

Nonetheless, WiMax could eventually prove to be important for Sprint since wireless is the area in which the company is growing -- albeit not as fast as larger rivals AT&T Inc. (NYSE: T) and Verizon Wireless -- while wireline stagnates.

Wireless revenue for the quarter is up more than 3 percent from $8.8 billion, while fixed-line revenue is flat at $1.6 billion.

Sprint added 373,000 subscribers for the quarter but continued to lose some of its most valuable enterprise customers from the Nextel side of the house. By comparison, AT&T and Cingular both added more than 1.5 million customers this quarter.

Data revenues were a bright spot for Sprint, despite a seasonal decline in average revenue per user (ARPU) overall to just above $60 for monthly subscribers. Total data service revenues increased 4 percent from the previous quarter and 40 percent from the second quarter last year. Data ARPU was around $9.75, or about 16 percent of total ARPU. CDMA network users spent approximately $12.75 monthly for data.

Heavy data usage could be an early indicator that WiMax might be a success with Sprint users. The new network offers better-than-3G download speeds. It remains to be seen exactly how much the operator's network deployment deal with Clearwire LLC (Nasdaq: CLWR) will reduce its WiMax spending during the coming quarters. (See Clearwire & Sprint Team on WiMax.)

Sprint investors, however, are still suffering from bottom-line shock syndrome. The operator's shares dropped 45 cents, or 2.23 percent, to $19.77 during the day on the news of the drastic profit fall.

— Dan Jones, Site Editor, Unstrung

About the Author(s)

Dan Jones

Mobile Editor

Dan is to hats what Will.I.Am is to ridiculous eyewear. Fedora, trilby, tam-o-shanter -- all have graced the Jones pate during his career as the go-to purveyor of mobile essentials.

But hey, Dan is so much more than 4G maps and state-of-the-art headgear. Before joining the Light Reading team in 2002 he was an award-winning cult hit on Broadway (with four 'Toni' awards, two 'Emma' gongs and a 'Brian' to his name) with his one-man show, "Dan Sings the Show Tunes."

His perfectly crafted blogs, falling under the "Jonestown" banner, have been compared to the works of Chekhov. But only by Dan.

He lives in Brooklyn with cats.

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