Sprint's ( S) downhill run is still picking up speed.

The Reston, Va., wireless shop has just closed books on what analysts predict could be the worst quarter of a largely dismal 2006. Sputtering on all cylinders, Sprint appears poised to keep losing ground until the second half of this year.

Sprint's list of woes, which earned it the coveted No. 3 spot in TheStreet.com's Five Dumbest Things on Wall Street This Year , grows larger by the month. The integration of Nextel has gone from challenging to a disaster by some estimates as once-loyal high-paying customers go elsewhere. Sprint's monthly defection rate stands at 2.4% as of the third quarter, up from 2.1% from the second quarter.

That industry-worst churn rate is likely to grow when the company releases its fourth quarter results. It seems that in addition to the cancellations and the cleanout of nonpaying customers, Sprint's wholesale business is also dragging down the results.

Virgin Mobile, which sells Sprint wireless under its own brand, has seen growth cool down. Based on Virgin Mobile's fourth-quarter numbers, Bank of America analyst Dave Barden estimates that Sprint added 230,000 total net wholesale subscribers. That's up 30% from the prior quarter but far below the 160% sequential growth in the year-ago quarter.

As the No. 3 player behind Cingular, AT&T's ( T) wireless unit, and Verizon Wireless, jointly owned by Verizon ( VZ) and Vodafone ( VOD), Sprint is already slightly disadvantaged. And making it worse, the company can't seem to catch a break.

For example, Motorola ( MOT) introduced an ultrathin phone called the Razr two years ago, and it became a huge hit for Cingular and later Verizon. Now, just as the Razr is quickly falling out of fashion , Sprint has started offering the phone.

Shockingly, it hasn't been a blockbuster.

"Based on our fourth quarter store visits, Sprint sales reps indicate that they have not necessarily seen an improvement in sales as result of selling the Motorola phones," Merrill analyst David Janazzo wrote in a research note Friday.

The company can't even find a suitable way to sell its image.

In August, Sprint vowed to revitalize its branding efforts. That rendered some "horrid advertising," says one money manager with no Sprint positions.

Last month, the company hired a new branding chief and put its advertising effort under review. As Bank of America's Darden points out, Sprint is probably pursuing a unified message since it currently has one agency handling ads to business users and another agency working on consumer advertising.

Analysts say the company has a lot of work still ahead before operations start to improve.

After meeting with Sprint's top management, Prudential Equity Group analyst Rick Klugman wasn't able to raise his neutral rating to a buy.

"We continue to believe results will remain weak for at least the next 2-3 quarters as the new plans take effect," Klugman wrote in a note to clients.

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