Sprint report boosts stock
Despite a widening net loss, Sprint Nextel Corp. finally got some good news in its long recovery Monday, as a surge in “prepaid” customers offset another nightmarish drop in valuable subscribers who sign annual contracts.
Investors responded by sending shares of the nation’s third-largest wireless provider up sharply.
Sprint shares gained 33 cents, or 7.1%, to close at $5 after reaching as high as $5.48 earlier in the session.
The Overland Park, Kan., company lost $594 million, or 21 cents per share, during the three months ending March 31.
That compares to a loss of $505 million, or 18 cents, a year earlier.
Not including one-time charges, Sprint said, it would have earned 3 cents per share, compared with the 4-cent loss analysts surveyed by Thomson Reuters had predicted.
The company said it recorded a $327-million charge for severance and other costs connected with its announcement in January that it planned to cut 8,000 more jobs -- 14% of its work force.
Sprint cut 4,000 jobs last year.
Revenue declined 12% to $8.21 billion, below analysts’ expectation of $8.28 billion.
The Wall Street Journal, citing unnamed sources, reported on Monday that Sprint was in final discussions to outsource management of its cellular network -- and transfer 5,000 to 7,000 U.S. jobs -- to Telefon AB L.M. Ericsson.
Stifel Nicolaus analyst Christopher King wrote in a research note that shifting the network management to another company could cut Sprint’s annual expenses by $1 billion.
In an interview Monday with the Associated Press, Chief Executive Dan Hesse said Sprint was looking at several cost-cutting ideas.
Those proposals included “the possibility of outsourcing certain parts of the management of our network assets, but no decisions have been made and we don’t comment on speculation.”
Sprint said its number of subscribers fell 182,000, a marked improvement from the company’s fourth quarter, when it lost 1.3 million.
However, the company said it lost 1.25 million valuable “postpaid” customers who sign contracts, an increase from the loss of 1.1 million contract subscribers in the fourth quarter.
