NEW YORK (Reuters) – Sprint Nextel Corp posted a $29.45 billion quarterly loss on Thursday due to a hugeimpairment charge and forecast that subscriber losses will deepen inthe first quarter, pushing its shares down 10 percent.
The No. 3 U.S. mobile service also announced that it would stoppaying dividends for the "foreseeable future" and Chief Executive DanHesse said it would take many quarters to accomplish a turnaround andrebuild Sprint’s wireless brand.
Sprint, which has been losing ground to rivals amid network andcustomer service problems, forecast that it would lose 1.2 millioncustomers who pay monthly bills in the first quarter, compared with683,000 such losses in the fourth quarter.
While Sprint had warned last month of continued downward pressure,Stanford Group analyst Michael Nelson said the subscriber outlook was"considerably worse than even most of the bearish estimates out there."
Nelson, who had estimated that Sprint would lose 400,000 valuablepost-paid subscribers who pay monthly bills in the first quarter, saidinvestors were also disappointed that the company did not lay out aplan to turn around the business.
"People expected that things were going to be really bad but werehoping they were going to have a game plan of how they’re going to fixit," he said.
Instead, Sprint said it was assessing a reorganization of itsbusiness model, and associated sales, distribution and marketing plans.It also said it borrowed $2.5 billion from a revolving credit facility.
"It takes hard work and time to regain a reputation," Hesse, whoreplaced Gary Forsee as CEO in December, told analysts on a conferencecall. "To be frank, the issues we face are more difficult than what Iexpected to find."
Sprint also announced an unlimited calling plan that will be offeredbeginning on Friday that will cost $99.99 a month, following similarmoves by larger rivals AT&T Inc and Verizon Wireless, a venture of Verizon Communications and Vodafone. Analysts have said that these plans could herald a new price war in the industry.
Sprint’s fourth-quarter loss of $10.36 a share compared withearnings of 9 cents a share a year ago, or a net profit of $261million. Revenue fell 6 percent to $9.8 billion, which compared to theaverage Wall Street forecast of $9.91 billion.
The company posted earnings excluding items such as a $29.7 billionwrite-off of goodwill value from Sprint’s Nextel Communicationspurchase of 21 cents per share, which was better than the 18 cents pershare forecast by analysts, according to Reuters Estimates.
It forecast first-quarter operating income before depreciation and amortization of $1.8 billion to $1.9 billion.
Post-paid average revenue per user was $58 per month in the fourthquarter, and the company expects that to fall to a little over $56 amonth in the first quarter.
Sprint has lost more than 65 percent of its market value since August 2005, when it bought Nextel.
Its shares fell to $8.00 in early trade after closing at $8.95 on the New York Stock Exchange on Wednesday.
(Reporting by Sinead Carew, editing by Mark Porter)
? Reuters 2008 All rights reserved
Neuroscientist reveals a new way to manifest more financial abundance
Breakthrough Columbia study confirms the brain region is 250 million years old, the size of a walnut and accessible inside your brain right now.
