(Updates with analyst’s comment in fourth paragraph.)
Oct. 4 (Bloomberg) -- Sprint Nextel Corp., the third- largest U.S. wireless operator, slumped as much as 18 percent in New York trading on concern its plan to offer Apple Inc.’s iPhone to customers will hurt profitability.
Sprint has committed to buy at least 30.5 million iPhones over four years, which would cost $20 billion at current rates, the Wall Street Journal reported yesterday.
The deal would add a burden to unprofitable Sprint, which is already spending billions to upgrade its wireless network. The Overland Park, Kansas-based company also owns about half of Clearwire Corp., another money-losing carrier that is seeking additional funding.
“If it’s true, throwing a $20 billion dollar liability on your balance sheet is insanity,” said Ben Abramovitz, an analyst at Kaufman Brothers LP. “We may have just reached a tipping point. Investors have all these questions. ‘What is your Clearwire strategy? What is your 4G strategy? What are you going to do about the iPhone?’”
Sprint fell 25 cents, or 9.2 percent, to $2.48 at 10:49 a.m. in New York Stock Exchange trading, after dropping as low as $2.25. It lost 10 percent yesterday.
Sprint, which will present its plan to investors Oct. 7, is struggling to compete against Verizon Wireless and AT&T Inc., the two largest U.S. wireless operators, which are both able to offer the Apple device. In July, Sprint reported its 15th consecutive quarterly loss and lost more contract customers than some analysts had estimated.
Bill White, a Sprint spokesman, didn’t immediately return a call seeking comment.
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