Sprint Nextel Earnings Cheat Sheet: Margins Shrink For Fifth Straight Quarter

S&P 500 (NYSE:SPY) component Sprint Nextel Corporation’s (NYSE:S) third quarter loss narrowed, beating estimates. Sprint Nextel offers a range of wireless and wireline communications products and services.

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Sprint Nextel Earnings Cheat Sheet for the Third Quarter

Results: Loss narrowed to $301 million (loss of 10 cents per diluted share) from $911 million (loss of 30 cents per share) in the same quarter a year earlier.

Revenue: Rose 2.2% to $8.33 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: S beat the mean analyst estimate of a loss of 22 cents per share. Analysts were expecting revenue of $8.38 billion.

Quoting Management: “Sprint’s focus on creating the best customer experience with simple, unlimited plans and innovative products and services continues to strengthen our brand and drive positive results,” said Dan Hesse, Sprint CEO. “We are adding to our customer base, our ARPU is increasing, and as a result our wireless revenues are growing.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.2 percentage point to 44.7% from the year earlier quarter. Over that time, margins have contracted on average 1.8 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 3.6% to $8.31 billion in the second quarter. The figure rose 2.8% in the first quarter from the year earlier and climbed 5.5% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now topped analyst estimates for the last three quarters. It beat the mark by 6 cents in the second quarter and by 7 cents in the first quarter.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the fourth quarter has moved from a loss of 20 cents a share to a loss of 32 cents over the last ninety days. For the fiscal year, the average estimate has moved from a loss of 65 cents a share to a loss of 95 cents over the last ninety days.

Competitors to Watch: AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), Clearwire Corporation (NASDAQ:CLWR), Deutsche Telekom AG (DTEGY), MetroPCS Communications, Inc. (NYSE:PCS), Leap Wireless Intl., Inc. (NASDAQ:LEAP), NTELOS Holdings Corp. (NASDAQ:NTLS), United States Cellular Corp. (NYSE:USM), Telephone & Data Systems, Inc. (NYSE:TDS), and CenturyLink, Inc. (NYSE:CTL).

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(Source: Xignite Financials)