- 27Oct
(Reuters) - Sprint Nextel's (S.N) failure to turn around its wireless subscriber business in a period when investors bet heavily on growth sent its shares down about 9 percent.
The No. 3 U.S. mobile operator promised a better fourth quarter, but did not specify if it would continue to lose subscribers or begin adding more high value, bill-paying customers again.
Helped by the EVO smartphone from HTC Corp (2498.TW), Sprint the No. 3 U.S. mobile operator, posted a third-quarter net loss of 107,000 customers who pay monthly bills compared with analyst expectations for a loss of 173,500 and losses of 801,000 customers a year earlier.
But this was not a big enough change for shareholders who had pushed its shares up 20 percent since late August in the hope this customer segment would start growing again in the third quarter.
"Expectations got ahead of themselves," said Mizuho analyst Michael Nelson, who saw the results as a "vast improvement" from previous quarters, but he noted it would take Sprint "another couple of quarters to start growing the postpaid base."
Sprint has struggled to retain customers since its 2005 purchase of Nextel Communications, which operated the iDen network that was incompatible with Sprint's existing technology and does not support high speed Web surfing.
While the company has sought to address complaints over customer service issues and network problems, including a possible plan to combine the two networks, Sprint is still losing customers it acquired from Nextel.
Its rivals have fared much better.
Verizon Wireless added 584,000 postpaid customers in the third quarter and AT&T Inc (T.N), the No 2 U.S. mobile service and exclusive U.S. provider for Apple Inc's (AAPL.O) iPhone, added 745,000 subscribers.
SMARTPHONES PRESSURE MARGINS
Like other wireless providers, Sprint is dependent on smartphones and new devices for growth. But it comes at a cost.
The company's Chief Executive, Dan Hesse, said more new device launches would put further pressure on profits and would mean more subsidies in the fourth quarter, the busiest quarter of the year for phone sales.
"We hope they put pressure on our subsidies," he told reporters on a conference call. "It's better than the alternative."
Sprint reported its third-quarter net loss had widened to $911 million, or 30 cents per share from $478 million, or 17 cents per share in the same quarter a year ago.
The latest quarterly loss included a massive tax-related charge and was 2 cents wider than Wall Street expectations of 28 cents per share, according to Thomson Reuters I/B/E/S.
