NEWS: Sprint 4Q Loss Narrows,Pre-Paid Growth Falls Short
Sprint Nextel Corp. posted a narrower fourth-quarter loss but faced
increasing competition for wireless customers who pay in advance for
service, as competitors cut their prices during the holidays.
The Overland Park, Kan., wireless carrier, however, showed some progress
in reducing the number of its more lucrative contract customers that
left in the period. A majority of the defections came from the Nextel
end, while the Sprint side added customers for the first time in a year
and a half.
"The company is showing slow and steady progress," said Philip Cuscik,
an analyst at Macquarie Securities.
However, Sprint's pre-paid business--which are generally cheaper plans
that don't offer long-term service contracts--has been the company's
primary growth engine, with Sprint going as far as acquiring Virgin
Mobile USA to broaden its reach of consumers. Over the past year, the
business, primarily driven by its Boost Mobile line, has made up for
staggering losses among post-paid customers, or those committed to
long-term contracts.
Sprint shares were off 7.9% to $3.36 as a result of the disappointing
pre-paid business and disappointing financial results.
The nation's third-largest wireless provider reported a loss of $980
million, or 34 cents a share, compared with a year-earlier loss of $1.62
billion, or 57 cents. Fourth-quarter results included a one-time charge
of nearly 11 cents a share from deferred taxes, while year-earlier
figures included a $1 billion write-down. Analysts, on average, had
projected a loss of 19 cents a share.
Revenue fell 6.7% to $7.87 billion, below the average estimate of $8.04
billion.
Boost Mobile saw tremendous success over the past year through its
unlimited $50-a-month plan., but it faced increasing pressure in the
fourth quarter as Tracfone Wireless, a unit of America Movil S.A.B. de
C.V. (AMX), expanded its less expensive Straight Talk service through
Wal-Mart Stores Inc. (WMT). The service is powered by Verizon Wireless,
a unit of Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD).
At the same time, MetroPCS Communications Inc. (PCS) and Leap Wireless
International Inc. (LEAP) cut their prices in the fourth quarter, and
both are committed to maintaining the most affordable option.
"There's no question the industry is getting more competitive," Chief
Executive Dan Hesse said.
For the quarter, Sprint added 435,000 pre-paid customers and lost
504,000 post-paid subscribers.
Apple and Google may be on a seeming collision course, but when it comes
to the mobile market they are the two big winners. The losers? Most
everyone else.
comScore found that over a three-month period from September to December
2009, those two gained market share while Research in Motion, Palm and
Microsoft all lost ground. Considering it was a short period, only one
quarter, and that mobile phone customers are locked into hardware for
two years, even the smallest of changes is a noteworthy shift.
Google's Android more than doubled its market share, from 2.5 percent of
the smartphone market in September to 5.2 percent by December. As a
growing participant such a ramp is not too surprising but it is still a
good showing for a new player in a market full of established veterans.
Apple was the only other gainer, rising to 25.3 percent from 24.1
percent three months earlier. It remains in second place behind RIM,
which is still a dominant 41.6 percent of the smartphone market. RIM was
down one percentage point from 42.6 percent in September.
Microsoft (NASDAQ: MSFT) also dipped one percentage point, from 19
percent to 18 percent. The big loser is Palm, down from 8.3 percent to
6.1 percent in just three months, and that's with the highly-regarded
Pre and newer Pixi phones available
NEWS: Sprint 4Q Loss Narrows,Pre-Paid Growth Falls Short 
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