RealMoney Silver - Sprint Adds Users

Sprint Adds Users
By TSC Staff
8/8/2007 7:35 AM EDT

Sprint (S) posted a 94% drop in second-quarter earnings but swung to a small gain on its closely watched postpaid net wireless user rolls.

The Reston, Va., telco made $19 million, or a penny a share, from continuing operations for the quarter ended June 30, down from the year-ago $291 million, or a dime a share. On an adjusted basis, excluding certain costs including amortization, earnings were 25 cents a share in the latest quarter, down from 32 cents a year earlier. Revenue rose 2% from a year ago to $10.16 billion.

Analysts surveyed by Thomson Financial were looking for a 22-cent adjusted profit on sales of $10.21 billion.

"In the second quarter, Sprint began to realize benefits from our increased funding of business operations," said CEO Gary Forsee. "We reported a double-digit gain in subscriber acquisitions in our business channels. We met our goal of reducing churn to 2.0%, and network performance continued to improve. Industry-leading average post-paid customer revenues of $60 in the quarter and staffing actions in the first quarter supported a strong sequential improvement in adjusted OIBDA."

The company said it added 16,000 postpaid wireless customers in the second quarter, marking the first time since the middle of last year that Sprint has actually added users on that basis. Rivals Verizon (VZ) and AT&T (T) have been adding users by at least the hundreds of thousands each quarter, with many of their gains coming at Sprint's expense as the company struggles with poor network reliability and other issues.

Sprint reiterated its 2007 guidance, which calls for revenue of $41 billion to $42 billion.

"Our focus remains on closing churn and customer care gaps, building on our recently-launched Sprint Ahead marketing campaign, and extending the EVDO footprint to meet strong demand for wireless data services," Forsee said. "We will also continue to have significant resources assigned to the consolidation of many of our major systems, migrating customers from iDEN to CDMA utilizing PowerSource devices, preparing for the deployment of high-performance push-to-talk on our CDMA network, and cementing our plans for WiMAX deployment. While these initiatives are expected to impact reported results in the near term, we expect they will produce significant value over the long term."