Investors Play Tug Of War With Sprint After Earnings

Investors played tug-of-war with Sprint Nextel (NYSE:S) stock on Wednesday morning following the release of its first-quarter financial results. The company reported a net loss of $0.21 per share, which was not as bad as the $0.32 per-share loss that analysts were expecting. However, Sprint reported that it lost 560,000 retail postpaid subscribers in the quarter, above expectations for a loss of 512,000. Total wireless net losses came to 415,000.

Here’s a breakdown of the results:

Mar-12 Jun-12 Sep-12 Dec-12 Mar-13
Revenue ($) in millions 8,734 8,843 8,763 9,005 8,793
Diluted EPS ($) (0.29) (0.46) (0.26) (0.44) (0.21)
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Average postpaid revenue per user edged up 4.3 percent on the year to $62.47, while average prepaid ARPU edged down 2.8 percent to $26.08. Postpaid churn increased from 2.01 percent to 2.09 percent, while prepaid churn decreased from 3.61 percent to 3.26 percent.

The Sprint platform continued to prove itself the company’s strong spot, with 2 percent year-over-year postpaid APRU growth to $63.67. The Sprint platform subscriber base reached a record 53.9 million, logging a 12th consecutive month of net additions…

“This is a transformative year for Sprint and we’ve gotten off to a good start,” commented CEO Dan Hesse. “Record Sprint platform service revenue and subscriber levels fueled our performance. We achieved significant Adjusted OIBDA growth while investing heavily to improve our network, expanding our 4G LTE footprint and offering customers the best smartphones with truly unlimited data plans.”

Adjusted OIBDA increased 25 percent on the year to $1.5 billion.

Forecast

The company expects 2013 Adjusted OIBDA to be at the high-end of the previous forecast of between $5.2 billion and $5.5 billion excluding the effects of the closing of strategic transactions.

Next quarter, analysts are expecting the company to post a 1.9 percent decline in revenue to $8.68 billion. Earnings are expected to come in at a loss of $0.27 per share, which would be a substantial improvement over a loss of $0.46 per share in the year-ago period. For the year, analysts are looking for revenue of $35.08 billion and an earnings loss of $0.88 per share.

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Bidding War

Sprint’s earnings come between competing bids for control of the company. The company is currently engaged in a $20 billion deal with SoftBank that would give the Japanese company 70 percent control. However, just the other week, Dish (NASDAQ:DISH) offered $25.5 billion for the wireless carrier. Dish stock was down about 1 percent in morning trading on Wednesday.

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