Sprint Nextel Stands Behind $14.5 Billion Savings Target

NEW YORK -(Dow Jones)- Sprint Nextel Corp. Chief Financial Officer Paul Saleh stood behind the company's revised savings target of $14.5 billion Wednesday.

Part of those savings is coming from headcount reduction. Management positions had been cut by 25%. The company has also been cautious about filling open positions over the last nine to 10 months and will continue to be, Saleh said in an interview. Savings are also coming from reduced network spending and on non-network infrastructure such as billing and IT. Savings from marketing and sales make up another $3.5 billion, he said.

On other merger-related business, Saleh said negotiations with affiliates are continuing. Affiliate contracts were disrupted by the merger and must now be re-negotiated. Sprint Nextel has already bought out three affiliates but has several other partners with which to contend.

Earlier this week, Nextel Partners Inc. exercised a put option that forces the company to buy them out for billions for dollars. The two companies have been feuding over how much Sprint Nextel should pay. Saleh said the company wants adequate access to information to evaluate the value of the business.

Talks with Sprint affiliates are also continuing. Saleh said that companies are considering various alternatives including reaffiliation. Some are also "potentially" interested in carrying the whole, new product line in their markets.

On other business opportunities, Saleh declined to comment on recent reports that Sprint is nearing a pact with a consortium of cable operators including Comcast Corp., Cox Communications Inc. and Time Warner Inc. to sell cellular service.

He noted that "cable companies are certainly interested in wireless" and "believe they would be better off having quadruple play to face off with the Verizons of the world."

Sprint already has agreements with five out of nine cable providers to help with voice over IP applications and so forth. Others in the marketplace, such as satellite TV providers, are also showing interest in adding wireless and broadband services, he noted.

Sprint Nextel swung to a third-quarter profit as the company booked a lower depreciation expense in its long-distance operations following an asset-impairment charge recorded a year ago. The company posted net income of $516 million, or 23 cents a share, compared with a loss of $1.91 billion, or $1.32 a share, in the year ago period. Excluding items, earnings rose to 25 cents a share from 16 cents a share a year ago.

Third-quarter revenue rose 35% to $9.33 billion from $6.92 billion a year ago.

Saleh said he was happy with the results, especially considering all the merger activities that occurred during that time.

-By Ellen Sheng, Dow Jones Newswires; 201-938-5863; ellen.sheng@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 26th October 2005