Earnings Cheat Sheet: Is Sprint On Track?

Last earnings season, I highlighted the strong operating achievements for Sprint in a post titled “The Good News About Sprint.”  Now that earnings season is here again, let’s see how far Sprint has come in its third-quarter earnings report.

Earnings: Loss of $911M, almost double the year-ago loss of $478M

Revenues: About a 1 percent increase (yoy) to $8.2 billion

Actual vs. Expected: Loss of $0.30 (diluted) per share, $0.02 worse than expectations at a negative $0.28 per share; loss of $0.17 per share in the year-ago period

Notable Stats:

Added 644,000 total wireless subscribers (net 354,000)

Best ever churn rate for the third quarter

Continued recognition and awards for improved customer service and Sprint’s 4G Androidâ„¢ phone, HTC EVO

Core Product Updates:

-Introduced the popular Samsung Epic(TM) 4G handset in September

-Introduced Sprint ID, an application for content downloads built around customer or business needs

-Offering 400 minutes for $20 a month through its Virgin Mobile brand

-Sprint 4G is now available in 55 markets

Key Quotes: Driven by record customer satisfaction, and the performance of iconic devices like the EVO and Epic, Sprint’s momentum continued this quarter,” said Dan Hesse, Sprint CEO. “The Sprint brand gained postpaid customers for the fourth consecutive quarter as, for the second consecutive quarter based on porting data, more customers switched to Sprint from our competitors than switched from Sprint to our competitors. In addition, our last two quarters have been all-time bests for postpaid churn. We also saw improvement sequentially in prepaid net adds and our lowest prepaid churn in almost five years.”

Competitors: Verizon (VZ) and ATT (T)

Technicals: I’m repeating my original assessment of Sprint last quarter, where I said: “Like most companies growing market share, Sprint is expanding its customer base by spending money” and the stock “looks fully valued at its current price near $5 per share. The stock is hovering in overbought territory. The company needs to improve operating margins and income before calling this stock a buy.”

Still, I hold out hope for this stock in a far more robust economy, but for now, the wind is out of the sails for Sprint from a fundamental and technical standpoint. The stock remains overbought and continues to slide in early morning trade, down over 10 percent so far. Price-cutting seems to be the M.O. for the major wireless carriers in this environment, so don’t expect a turnaround any time soon. Then again, if you like to play long-shots and manage to pick up the stock at a bargain basement price, it could pay off in the longer term.

Sprint Nextel (NYSE: S)

Disclosure: No positions