Sprint Limbers Up

Updated from 7:50 a.m.

Sprint Nextel (S Quote) rose 4% early Wednesday after matching fourth-quarter earnings targets despite its latest decline in postpaid wireless subscribers.

The Reston, Va., telco made $261 million, or 9 cents a share, from continuing operations for the quarter ended Dec. 31, up from the year-ago $5 million, or less than a penny a share. Sales rose 7% from a year ago to $10.44 billion.

On an adjusted basis, excluding costs including amortization, earnings were 29 cents a share. Analysts were looking for a 29-cent profit on sales of $10.36 billion.

Sprint executives told analysts on a conference call that they have $2 billion in cash and expect the company to generate free cash flow this year. The executives said they would not participate in new radio spectrum auctions, and they promised to put the cash to "better use." Paying off some debt may be on the agenda. Sprint's long-term debt grew by $1 billion to $21 billion over the 2005 level.

The news comes after a series of earnings disappointments at Sprint led to a decision earlier this year to cut 5,000 jobs. A Sprint spokeswoman emphasizes that "many of these reductions are being met with voluntary departures."

"We have established a framework to bolster our business operations and drive future growth and profitability," said CEO Gary Forsee in a Wednesday morning press release. "Our efforts in 2007 will be centered on improving subscriber acquisition and retention, extending our lead in data services, fully capturing cost efficiencies and developing an innovative high-speed data network that will provide significant differentiation and cost advantages."

The company said it lost 306,000 wireless postpaid subscribers in the latest quarter, as lucrative former Nextel users continue to flee to rivals Verizon Wireless and Cingular. Sprint said it added 742,000 net users during the quarter, but Wall Street tends to place a greater value on postpaid subscribers, who usually are more loyal and pay more.