Story updated to clarify Sprint's subscriber additions in the third quarter and iPhone costs.



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CEO Dan Hesse is delusional. Shareholders who are bullish on the beleaguered phone company may very well be too.

During today's quarterly conference call, Hesse compared himself to actor Brad Pitt after saying the book-turned-movie


reminded him of Sprint's story as the underdog battling


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. This from the man who insisted on being the face of Sprint's television ad campaign in order to humanize the business.

Separated at birth: Brad Pitt and Dan Hesse

Granted, Hesse did have at least one reason to be cheerful this morning after Sprint narrowed its third-quarter loss, beating analysts' expectations. The average revenue per subscriber on the postpaid side increased as more users took advantage of Sprint's unlimited data services.

However, there are far bigger concerns from the company that don't relate at all to the company's third quarter, its last before the iPhone finally arrived on the network four years after its launch on rival AT&T's network.

With the stock down 42% this year after Wednesday's 10% slide, it's clear that investors aren't thrilled with what the future holds for the third-largest wireless provider in the U.S.

Often mentioned as an M&A target for industry consolidation, Sprint has instead tried to succeed by being the low-cost alternative to heavyweights AT&T and Verizon. The value proposition appears to be winning, as Sprint added 1.3 million total net wireless subscribers, with 304,000 net postpaid additions and 485,000 net prepaid additions. However, Sprint lost 44,000 net contract subscribers in the third quarter, more than the average analyst estimate of 4,300, according to



"The best thing they have going for them is being an attractive takeout candidate," says Eric Jackson, founder of Ironfire Capital and a contributor to


. "The government won't let them fail and take the market down to three players. It's a mess over there."

Sprint is now betting on the iPhone to be its savior. The company had reportedly committed $20 billion to Apple for 30 million iPhone handsets over the next four years, whether Sprint is able to sell them or not. Sprint divulged that the total was closer to $15 billion today, having previously said that the iPhone was the biggest phone launch in Sprint's history.

"Obviously, the fact that the rich take-or-pay commitment to Apple wasn't included in any financial projections only further contributed to the down-the-rabbit-hole sense of the day," Sanford C. Bernstein analyst Craig Moffett wrote in a research note today. "The pervasive sense that Sprint


has not articulated its


path forward arguably renders the most recent quarterly results relatively inconsequential."

Most troubling for Sprint is its funding gap. Earlier this month, Sprint told analysts the company would likely need to raise capital as it burns through cash to upgrade its network, even before the added costs of bringing the iPhone to its network. Today, the company finally said the funding need is as much as $7 billion. But even this revelation isn't the reason it's hard to be bullish on Sprint now.

"Everyone already knew Sprint needed money," Moffett writes. "It was that the plan presented wasn't credible."

The plan Moffett refers to is the network upgrade it wants to complete by the end of 2013. For investors, that could mean two years before the company's financial position could begin to improve. It's worrisome to some, though, that the 4G plan Sprint is laying out is cloudy at best.

Earlier this month, it appeared Sprint was willing to leave partner



out in the cold by implementing an LTE strategy that would use spectrum from rival


. However, on today's conference call, Hesse made a U-turn and said Sprint now has an agreement with Clearwire and that Sprint could use Clearwire's 4G LTE capacity in 2013.

"An LTE strategy ... with Clearwire under the bus and with no spectrum relief in sight outside of the Hail-Mary pass that is LightSquared, seemed as though it


be the real plan," Moffett wrote today. "If (and that's a very big 'if') Sprint can articulate a plausible 4G strategy, and if they can sort out the mess with Clearwire, financing their way through the trough of 2012 and 2013 will be a lot easier ... and investors might plausibly begin to focus on 2014."

Huge subsidies for the iPhone, an unclear outlook, a cloudy 4G strategy and a need to raise capital, when taken all together, make a bearish case against Sprint. And yet, sell-side analysts don't completely hate the stock.

Moffett is among 24 analysts who say Sprint shares are a "hold" or "neutral," while eight say they're a "buy" or "outperform." A quarter of Sprint analysts reiterated their call after today's earnings report. Only two analysts recommend dumping the stock.

What matters for Sprint is what will come in 2012 and beyond. Moffett says there are glimmers of hope, though "there's a lot of road between now and then, and we are not prepared to make a directional bet either way."

-- Written by Robert Holmes in Boston


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