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2ND UPDATE: Sprint Profit Falls More Than 50%; Premium Users Lost
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WASHINGTON (Dow Jones) -- Sprint Nextel on Thursday said third-quarter profit fell more than 50% as the company incurred costs from the spinoff of its local-phone business and lost nearly 200,000 premium wireless customers.
Sprint also maintained its prior full-year forecast on revenue and operating income, suggesting that the company's performance has not deteriorated as sharply as some investors feared. Sprint stock rose as much as 5% in early Thursday trades.
Reston, Va.-based Sprint, the No. 3 mobile operator in the U.S., said net income fell to $247 million, or 8 cents a share, from $516 million, or 23 cents a share.
Sales rose 34% to $10.5 billion from $7.82 billion a year earlier, lifted by wireless gains and the acquisition of Nextel in August 2005.
Adjusted to account for the Nextel and other one-time items, Sprint said it earned 32 cents a share. Revenue rose a lesser 8% on an adjusted, or pro forma, basis, which assumes the Nextel merger had occurred at the start of 2005.
Sprint was projected to earn 33 cents a share on revenue of $10.5 billion, according to the consensus estimate of analysts surveyed by Thomson First Call.
Although Sprint added 233,000 net customers, the company lost 188,000 highly valued "postpaid" subscribers -- those on yearly plans who pay their bills at the end of each month.
Those losses were offset by customers gained through wholesale arrangements or the company's Boost Mobile prepaid service, which targets younger people. Those customers are less lucrative, however.
To fix the problem, Sprint Chief Executive Gary Forsee has taken a more hands-on role in daily operations. Two months ago, the company's chief operating officer was forced out and other changes are expected.
The move is part of a broader effort by Forsee to get Sprint back on track after several quarters of lackluster customer growth. The company has failed to keep up with bigger rivals Cingular Wireless and Verizon Wireless, and is losing subscribers at a higher rate.
Sprint has implemented a series of initiatives to add new customers and retain old ones. The company is releasing a slew of new phones, including Motorola's popular Razr and other thin-styled handsets.
Sprint has also announced plans to spend up to $3 billion to build the nation's fastest wireless network by 2008 in an expensive gamble to take the lead in the fledgling market for mobile Internet access.
(END) Dow Jones Newswires"
Tags: [thomson] [boost mobile] [cingular] [3 mobile] [razr]
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