Bloomberg News

Sprint Beats Estimates Even After 560,000 Customers Depart (4)

April 24, 2013

Sprint Beats Estimates Even as 560,000 Customers Leave Service

Sprint shares have more than tripled in the past 12 months as the company found itself the target of a bidding war. Photographer: Victor J. Blue/Bloomberg

Sprint Nextel Corp. (S:US), the third- largest U.S. wireless carrier, reported a narrower-than-expected first-quarter loss, even as 560,000 subscribers departed.

The first-quarter loss was 21 cents a share, Overland Park, Kansas-based Sprint said today in a statement. Analysts had predicted a loss of 34 cents on average, according to data compiled by Bloomberg. Sales rose less than 1 percent from a year earlier to $8.79 billion, compared with an average estimate (S:US) of $8.74 billion.

Sprint, which is spending to build a faster long-term evolution network to retain more customers, sold 5 million smartphones, including 1.5 million of Apple Inc. (AAPL:US)’s iPhone. Though smartphone sales hurt profit in the short term because carriers subsidize them, the devices encourage subscribers to use more data, helping increase revenue in the long run.

“While Ebitda beat is nice to see, the contributing factor was the lower gross adds,” said Jennifer Fritzsche, an analyst at Wells Fargo & Co. in Chicago, in a research note. Ebitda is a measure of profit. “Sprint is trying to get its LTE ramped up before being aggressive with its marketing and focusing on share gain,” she said.

Sprint fell less than 1 percent to $7.09 at the close in New York. The shares have almost tripled in the past 12 months as the company found itself the target of a bidding war. Tokyo- based SoftBank Corp. (9984)’s agreement to pay $20 billion for a 70 percent stake was followed earlier this month by a $25.5 billion proposal from Dish Network Corp. (DISH:US) Both deals aim to build Sprint into a bigger challenger to Verizon Wireless and AT&T Inc. (T:US)

Improved Forecast

The company forecast (S:US) 2013 operating profit to be at the high end of its previously stated range of $5.2 billion to $5.5 billion, before depreciation and amortization and excluding the closing of transactions.

The 560,000 contract customer defections compared with an expectation of 512,000, based on the average of eight analysts’ estimates compiled by Bloomberg.

Sprint’s first-quarter average phone bill for contract customers was $62.47, up from $61.47 in the fourth quarter. Analysts were expecting $62.54, according to the average of seven estimates.

Of the first-quarter iPhone customers, Sprint said 43 percent were new to the carrier, compared with 38 percent last quarter.

The operating profit margin of the wireless business, excluding costs such as depreciation and amortization, was 19.2 percent in the first quarter, up from 14.6 percent a year earlier. Analysts had estimated a margin of 14.7 percent.

Sprint’s first-quarter net loss narrowed to $643 million, or 21 cents a share, from $863 million, or 29 cents, a year earlier.

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

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • S
    (Sprint Corp)
    • $8.0 USD
    • 0.36
    • 4.5%
  • AAPL
    (Apple Inc)
    • $98.38 USD
    • -0.64
    • -0.65%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus