Sprint Revenue Misses Forecast; Profit Declines

Sprint Nextel Corp. on Thursday reported weaker-than-expected revenue and wireless subscriber growth in the second quarter and cut its full-year outlook, driving shares down 16% to a two-year low.

Hefty merger charges also helped push down profit at the No. 3 U.S. wireless provider, eclipsing its announcement of a $6-billion share buyback.

Reston, Va.-based Sprint, which bought Nextel last August, said profit was $370 million, or 10 cents a share. A year earlier, it earned $600 million, or 40 cents, before it bought Nextel.

Revenue was $10 billion, below the average analyst forecast of $10.49 billion according to Reuters Estimates. Sprint had revenue of $5.68 billion a year earlier before the Nextel deal.

“Everybody knew this was going to be a bad quarter. I don’t know that they knew it was going to be a really bad quarter,” said Surterre Research analyst Todd Rethemeier.

Sprint said it added 708,000 wireless subscribers in the quarter, compared with an average estimate of more than 940,000 from eight analysts contacted by Reuters.

“They’re definitely losing market share, hemorrhaging it. I would say they’re getting crushed,” Stifel Nicolaus analyst Chris King said.

Sprint competitor Cingular Wireless, a venture of AT&T; Inc. and BellSouth Corp., added 1.5 million customers. Verizon Wireless, owned by Verizon Communications Inc. and Vodafone Group, added 1.8 million in the quarter.

Sprint shares fell $2.38 to $17.75.