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Stock of the Day
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Sprint Nextel (S)
Sprint Focuses on Attracting Customers, But Still Loses 545,000 Subscribers
Sprint Nextel has been having a rough time trying to keep up with its competitors. AT&T (T: Charts, News, Offers) and Verizon (VZ: Charts, News, Offers) seem to be soaring ahead, while Sprint is struggling just to stay in the game. Sprint has been posting loss after loss, loss in profit, loss in number of subscribers, and so on, and today's third quarter earnings report was no exception. But despite how things appear on the surface, Sprint CEO Dan Hesse said these were Sprint's best results in two years. What is it that gives Hesse hope for the future, and how long will it be before we see gains on the company's reports once again?
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This morning, Sprint Nextel reported a third quarter net loss of $478 million, a significant drop from last year's $326 million loss, and revenue fell from $8.8 billion to $8.04 billion. And yet as frustrating as those numbers seem, the area where Sprint is really struggling is in its subscriber numbers. AT&T added approximately 2 million subscribers in the third quarter, and Verizon added over a million. Sprint, on the other hand, posted a net loss of 545,000 subscribers. The net loss was comprised of a gain in prepaid customers, but a loss of over 800,000 postpaid contract subscribers (unfortunately for Sprint, this is the subset of wireless subscribers who tend to spend the most on their plans). What's even more frustrating is that a good portion of Sprint's profit loss is attributed to the company's increased spending on subsidizing phones, which they have done in an effort to attract more customers to their cheaper phones; without this, their subscriber loss would likely have been even higher.
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Amazingly, what CEO Hesse is focusing on that makes him optimistic is actually the postpaid subscriber number. Although the number seems high, it is an improvement from the last few quarters (which saw losses of 991,000 and 1.25 million). Hesse claims this is the best improvement they've had in this statistic in five years, and predicts they will see similar improvements in upcoming quarters. Hesse's prediction for the future is that "we expect to see sequential quarterly improvement in both post-paid and total net subscriber losses in the fourth quarter of 2009." Hesse was careful to say that although he is optimistic and pleased with these results, that the company is not content with these continual losses, and they will continue to push until they reach gains. That said, there is no indication of how long it will take for Sprint to be able to accomplish that goal. Although the Palm (PALM: Charts, News, Offers) Pre smartphone and their 4G network have started to help the company move towards improvements, until the company is able to decrease their subscriber churn, they will remain a distant third.
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Sprint Nextel Commentary:
Palm Pixi Available Nov. 15 for Just $99.99 Exclusively from Sprint - Check out the press release for Sprint's newest smartphone, the Palm Pixi.
Sprint Plans Open App Store - Earlier this week, Sprint announced plans to open an app store for its smartphones, yet another attempt at remaining competitive with Apple's iPhone.
Sprint: Even Fewer Dropped Calls, Callers - This blogger discusses Sprint's subscriber trends, and points to some graphs that help illustrate the issue.
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More Stocks in the News:
Exxon Mobil earnings: Down today, up tomorrow, but after that ... who knows? -Although Exxon Mobil (XOM: Charts, News, Offers) still remains at the top of the pack, what caused their profits to drop 65% in Q3?
Live Blogging Yahoo Investor Day 2009 - Yesterday was "Investor Day" for Yahoo (YHOO: Charts, News, Offers); check out the company's comments on branding, their home page, media, and much more. . .
Aetna 3Q Profit Up 18%, But Medical Costs High - Although many pharmacies such as CVS (CVS: Charts, News, Offers) expected to "benefit" from this flu season, high costs have affected medical benefits providers such as Aetna (AET: Charts, News, Offers).
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Click here to view a detailed profile of Sprint Nextel.
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