Updated from 9:12 a.m. EST

Sprint ( S) will slash 4,000 jobs as subscriber losses continue to erode the user base at the No. 3 wireless shop.

As TheStreet.com first reported last week, Sprint saw a mass exodus of subscribers in the fourth quarter, testing investor patience as they wait for signs of a turnaround.

Shares of Sprint were tumbling $2.22, or 19%, to $9.36 in recent trading.

The monthly rate of customer defections, or churn, was 2.3% in the fourth quarter, matching the third quarter's alarming exit rate. Sprint's total net subscriber losses in the third quarter were 109,000 as the addition of 776,000 new users failed to offset the loss of 885,000 customers during the period ended last month.

"Anticipating continued downward pressure on subscriber trends, revenues, and profitability in 2008," Sprint said in a press release, it will cut 4,000 people, or about 6% of its staff. The plan also includes the closure of 125 stores, or about 8% of its total retail outlets.

The company will use a combination of buyouts and severance agreements to reach its 4,000 employee termination goal. The cuts are expected to be complete by midyear and the company says it will take a charge in the first quarter for the costs.

The big cuts are the first major move by CEO Dan Hesse, who was appointed to the top job one month ago. With a new chief, Sprint was expected to show some signs of stability amid a relatively healthy wireless market. But Sprint shares have fallen 21% since Hesse's arrival.

The subscriber losses come as No.1 wireless player AT&T ( T) is expected to post blowout fourth-quarter user gains next week. And No.2 Verizon Wireless -- co-owned by Verizon ( VZ) and Vodafone ( VOD) -- is also likely to post a solid increase in customers.

Hesse is conducting a sweeping strategic review of the company and has put major projects like WiMax on hold, say people familiar with the company. The company will report fourth-quarter numbers on Feb. 28, but sources say executives will not offer any financial guidance until its analysts' day sometime in April.

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