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Sprint Limbers Up

Shares rise after a promise to spend cash wisely.

Updated from 7:50 a.m.

Sprint Nextel

(S) - Get SENTINELONE, INC. Report

rose 4% early Wednesday after matching fourth-quarter earnings targets despite its latest decline in postpaid wireless subscribers.

The Reston, Va., telco made $261 million, or 9 cents a share, from continuing operations for the quarter ended Dec. 31, up from the year-ago $5 million, or less than a penny a share. Sales rose 7% from a year ago to $10.44 billion.

On an adjusted basis, excluding costs including amortization, earnings were 29 cents a share. Analysts were looking for a 29-cent profit on sales of $10.36 billion.

Sprint executives told analysts on a conference call that they have $2 billion in cash and expect the company to generate free cash flow this year. The executives said they would not participate in new radio spectrum auctions, and they promised to put the cash to "better use." Paying off some debt may be on the agenda. Sprint's long-term debt grew by $1 billion to $21 billion over the 2005 level.

The news comes after a series of earnings disappointments at Sprint led to a

decision earlier this year to cut 5,000 jobs. A Sprint spokeswoman emphasizes that "many of these reductions are being met with voluntary departures."

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"We have established a framework to bolster our business operations and drive future growth and profitability," said CEO Gary Forsee in a Wednesday morning press release. "Our efforts in 2007 will be centered on improving subscriber acquisition and retention, extending our lead in data services, fully capturing cost efficiencies and developing an innovative high-speed data network that will provide significant differentiation and cost advantages."

The company said it lost 306,000 wireless postpaid subscribers in the latest quarter, as lucrative former Nextel users continue to flee to rivals

Verizon Wireless



. Sprint said it added 742,000 net users during the quarter, but Wall Street tends to place a greater value on postpaid subscribers, who usually are more loyal and pay more.

Post-paid churn, reflecting customer defections, was 2.3%, compared with 2.4% in the third quarter and 2.1% in the fourth quarter a year ago. The increase from the year-ago period is due to higher churn among iDEN subscribers. The sequential improvement is due to lower churn within the CDMA base offset by higher churn in former Nextel Partners markets.

Post-paid average revenue per user was a little over $60, reflecting a 1% sequential decline and a less than 5% decline from the year-ago period. Postpaid ARPU continues to be impacted by lower voice revenues, which are being partially offset by growth in data revenues. Sequentially, CDMA ARPU was flat at $59, while iDEN ARPU declined 2% to $62. Compared with the year-ago period, CDMA ARPU was down 1%, while iDEN ARPU declined 8%.

The company maintained its full-year revenue guidance of $41 billion to $42 billion but trimmed its capital spending target to $8 billion from $8.5 billion, reflecting accelerated spending in the recent fourth quarter.

Shares rose 77 cents to $19.22.