Sprint Earnings: Nextel Closing Costed Company Big Bucks
Sprint Corp. (NYSE:S) posted earnings this morning that showed the company suffered in the quarter from costs and the customers lost through shutting down the Nextel platform, but Sprint’s wireless service revenue reached a record high, growing 8 percent to $7.2 billion.
Earnings per share fell below analyst estimates. Sprint posted a loss of 53 cents, down from a loss of 46 cents in the second quarter of 2012. Analysts had been expecting the company to lose just 30 cents for the quarter. A depreciation of $430 million plus costs related to shutting down Nextel caused the loss.
Net loss grew from $1.4 billion a year ago to $1.6 billion for this quarter. But the company beat expectations for revenue, which grew 0.38 percent to $8.88 billion, up from analyst expectations of $8.69 billion. Despite a postpaid Nextel recapture rate of 34 percent, Sprint still lost 1.05 million contract subscribers through the closing of Nextel. That’s up from a loss of 246,000 year-over-year. It cost the company $623 million to shut down Nextel.
Sprint stands out from the crowd of wireless providers by offering a lifetime guarantee for unlimited data. Customers can continue to receive unlimited talk, text, and data for the entire life of their plan. Sprint believes the move allows customers to take advantage of the top smartphones the carrier offers without worrying about getting slammed with fees for surpassing data limits. Other major wireless providers typically charge customers based on the amount of data they use, a lucrative move, considering how dependent people have become on their smartphone devices.
Sprint also has big plans for its recent purchase by Japanese telecommunications company SoftBank (SFTBY.PK). SoftBank paid $21.6 billion for a 78 percent stake in Sprint. SoftBank CEO Masayoshi Son said he wants to turn Sprint into a real competitor on the U.S. wireless market, rather than a distant third behind industry leaders AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ). That deal closed at the beginning of the month.
At the same time, Sprint won a bidding war against Dish Network (NASDAQ:DISH) for the remaining shares of Clearwire Corp. (NASDAQ:CLWR) it didn’t already own. Sprint plans to use the new wireless spectrum holdings to improve its 4G LTE network. Sprint said the Clearwire buy will give it 2.5GHz of additional spectrum assets that it plans to integrate into its network.
Follow Jacqueline on Twitter @Jacqui_WSCS