Bloomberg News

Sprint Nextel Boosts Bonuses by Excluding Cost of Apple IPhones

February 15, 2012

Feb. 14 (Bloomberg) -- Sprint Nextel Corp., which sells Apple Inc.’s iPhone at a loss, says it excluded the device’s cost from its 2011 bonus calculations for eligible employees.

The move, which also excludes payments from partner LightSquared Inc., made short-term incentive bonuses 73.7 percent of target, up from the 63.7 percent amount that included these items. Sprint’s long-term incentive bonus rose to 106.5 percent from 91.5 percent of target with the adjustments, the Overland Park, Kansas-based company said yesterday in a filing.

Sprint, the nation’s third-largest wireless phone company, like bigger rivals Verizon Wireless and AT&T Inc. sells the iPhone at a loss to sign up customers on two-year contracts. Sprint, which has recorded five years of consecutive losses, said it sold 1.8 million iPhones in the fourth quarter and saw its subsidy costs increase about 40 percent.

The carrier, which started selling the iPhone in October, says it’s now on equal footing with its competitors.

“The company believes that the investment it is making in the iPhone will be beneficial to our shareholders in the long- term,” Sprint said in yesterday’s filing.

--Editors: Niamh Ring, Stephen West

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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