Sprint stock dives 16% as company bleeds subscribers
Sprint Nextel Corp. lost 16% of its market value Thursday after releasing earnings results that disappointed investors and showed the company continuing to lose mobile subscribers.
Despite announcing a $9-billion deal to share its next-generation 4G network with wireless wholesaler LightSquared, Sprint shares dropped 82 cents to close at $4.34.
Sprint said it lost 101,000 wireless contract subscribers during the quarter, significantly worse than the 15,000-customer loss that analysts expected. (Verizon Wireless, which reported its earnings earlier this month, gained 2.1 million contract subscribers during its recent quarter.) Sprint reported a net loss of $847 million, an unwelcome surprise for analysts that had expected losses closer to $530 million.
"We faced a number of competitive head winds that became more pronounced in the second quarter," said Joseph J. Euteneuer, Sprint's chief financial officer. "This includes the first full quarter both major competitors offered the iPhone, aggressive pricing on the iPhone, as well as a variety of other handsets."
The third-largest U.S. wireless carrier has been feeling pressure since rival AT&T Inc. announced earlier this year that it intended to buy T-Mobile USA, which would create a wireless giant far larger than Verizon, the current market leader. Sprint has vehemently opposed the deal, saying it would hurt competition and drive up mobile phones' prices.
Chief Executive Daniel Hesse reminded investors of Sprint's position on the deal in a conference call Thursday.
"Sprint has been the most visible leader of those that oppose the proposed takeover, but opposition is beginning to come from all corners," Hesse said.
The company also trumpted its deal with LightSquared, under which Sprint would receive $9 billion in cash for building and running a 4G wireless network using bandwidth owned by the Reston, Va., company. LightSquared wants to lease parts of the 4G network to other wireless companies and device makers.
But LightSquared has run into opposition to its network. A report online, apparently by the Federal Aviation Administration, says LightSquared's network would harm air traffic signaling and could "adversely affect U.S. international leadership in aviation."
-- David Sarno
Photo: Outside a Sprint retail store in Homestead, Pa. Credit: Gene J. Puskar / Associated Press