WASHINGTON (Dow Jones) -- Sprint Nextel on Wednesday reported a 95% decline in second-quarter earnings, hurt by lower mobile profits and higher expenses.
The No. 3 wireless-phone company has been struggling to compete with rivals such as AT&T and Verizon Wireless. Sprint has reconfigured its top leadership and is pursuing new strategies for growth, but it's unclear if the company's plan is working.
Sprint has added new phones to its lineup, spent extra cash to attract customers and invested more heavily in network quality. The company lags well behind rivals in customer-satisfaction surveys.
In the second quarter, Reston, Va.-based Sprint posted net income of $19 million, or 1 cent a share. That's down from $370 million, or 12 cents, earned in the same period a year earlier.
Revenue rose a scant 1.5% to $10.16 billion, slightly below expectations. The company's wireless business grew 3% to $8.79 billion, while sales in Sprint's long-distance wireline segment were flat at $1.63 billion.
Operating expenses climbed 6% to $9.85 billion, including higher interest payments and advertising costs as well as additional network investment.
Excluding one-time costs and amortization, Sprint said it would have earned 25 cents a share in the latest quarter, down from 32 cents a share a year ago.
Measured on that basis, Sprint had been expected to earn 22 cents a share on revenue of $10.21 billion, according to the average of analysts' estimates as surveyed by Thomson Financial.
Sprint Nextel added net 373,000 subscribers to end the second quarter with 54 million, including wholesale customers and others signed up by affiliated companies.
By contrast, AT&T added 1.5 million and Verizon Wireless gained 1.3 million, with most of those new subscribers being signed up directly. "Postpaid" customers signed up directly by a carrier are the most profitable.
On a positive note, Sprint Nextel did add postpaid customers for the first time in four quarters, with a net increase of 16,000. In the three prior quarters, Sprint Nextel had lost 714,000 postpaid customers.
The gain mostly stemmed from the company's ability to hold on to existing customers. Sprint Nextel reduced its churn rate -- the percentage of customers who quit service -- to "a little more than 2%" compared to 2.3% in the first quarter.
"Sprint offered investors some glimmer of hope with its second quarter results," analyst Dave Novosel of Gimme Credit, a research service on corporate bonds, told clients.
Average monthly revenue per subscriber in the postpaid category fell more than 2% to just over $60 from a year earlier. Sales from data services such as email and Internet access accounted for 16% of average monthly revenue.
In recent Wednesday trading, shares of Sprint rose more than 2% to $20.67.
(END) Dow Jones Newswires"
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