Sprint Springs to Life Despite Wider Loss

Updated from 10:24 a.m. EDT

Sprint Nextel(S Quote) shares were shooting higher Monday as investors found reason for hope in the telecom giant's first-quarter earnings report.

The Overland Park, Kan.-based firm posted a loss of 21 cents a share, or $594 million, compared to a loss of 18 cents a share, or $505 million, in the same period last year. Excluding charges, however, Sprint reported earnings of 3 cents a share, down from earnings of 4 cents a share in the year-ago quarter, but better than the 5-cent loss expected by analysts.

Sprint's revenue slumped year over year, and sales came in at $8.21 billion, down 12% from $9.3 billion in the same quarter last year. Analysts surveyed by Thomson Reuters had expected sales $8.28 billion.

"Overall, Sprint had some positive areas to point to in the first quarter, and some areas for improvement," said Dan Hesse, the Sprint CEO, during a conference call.

Sprint lost 1.25 million of its postpaid customers during the first quarter and saw its total number of wireless users decline by around 182,000.

The wireless provider, which competes with AT&T(T Quote) and Verizon(VZ Quote), is looking to boost its business when it starts offering Palm's(PALM Quote) Pre phone during the second quarter.

"We're cautiously optimistic about the Palm Pre," said Hesse, during the conference call. "[And] we have a number of other devices that we're planning to launch between now and the end of the year."

Despite an unforgiving economic climate, Sprint saw some growth in its prepaid business, where its average revenue per user was $31, compared to $29 in the year-ago period and $30 in the prior quarter.

Sprint shares were gaining 12% to $5.33 in recent trading.

Sprint, which announced a major corporate restructuring in January, recorded a $327 million charge for severance and exit costs during its first quarter.