Sprint Nextel Has Loss, Revenue Falls Short (Update)

Updated from 8:23 a.m. EDT

Sprint Nextel (S) beat Wall Street's bottom-line estimates for the second quarter Wednesday, although the company missed revenue targets due to continuing struggles at its wireless business.

The Overland Park, Kan., phone company posted a quarterly loss of $344 million, or 12 cents a share, reversing a year-ago profit of $19 million, or a penny a share.

Excluding merger charges and severance costs totaling $149 million, Sprint earned 6 cents a share during the quarter, topping the average estimate for a profit of 3 cents a share.

However, Sprint said net operating revenue declined 11% from a year ago to $9.05 billion. On average, analysts had forecast revenue of $9.16 billion, according to Thomson Reuters.

Shares of Sprint were dropping 85 cents, or 9.9% to $7.70. The stock is now down 41% for the year.

Sprint's declining wireless division saw revenue drop 11% from the same period a year ago to $7 billion, as the unit continued to see subscriber losses. Sprint said its total count of wireless customers shrank to 51.9 million from 54 million in the year-ago quarter and 52.8 million in the first quarter of 2008. Some industry observers had hoped Sprint would stop hemorrhaging subscribers during the quarter.

"While I am pleased with the pace of progress so far...it will take some time to fully resolve our challenges," CEO Dan Hesse said on the company's conference call. Hesse added that Sprint has given up volume while it has improved the customer experience, and that tradeoff will ultimately benefit the company's financials.