Skip to main content

Updated from 7:49 a.m.

The dark days of October may finally be behind wireless carrier

Sprint PCS

(PCS)

, as it narrowed its loss in the fourth quarter on an 11% jump in sales, and added new customers.

The Overland Park, Kan., unit of

Sprint

undefined

has been cleaning house after reporting a net loss in customers at the end of the third quarter. The company ousted its chief executive, Charles Levine, shortly before the end of that quarter.

The company said Wednesday that it lost $259 million, or 25 cents a share, compared with a loss of $328 million, or 32 cents a share, in the same period last year. Excluding one-time charges, the company lost 18 cents a share in the latest quarter. Sales improved 11% to $3.05 from $2.7 billion in the year-ago quarter.

TheStreet Recommends

Looking ahead, the company reiterated its guidance and said it expects new customers to be added at a percentage in the high teens during 2003. It also said it expects the number of new customers to be between 6 million and 6.5 million, before accounting for customer defections.

"We believe results this morning were solid and indicated that the new programs implemented by management are bearing fruit, as bad debt expense declined while gross additions remained solid," said Jefferies & Co. analyst Ben Abramovitz in a note to clients. He pointed out that the company had beaten his firm's customer net addition targets slightly. "Furthermore, the company reiterated guidance for 2003; we would be aggressive buyers at these levels." Jefferies doesn't have an investment-banking relationship with Sprint PCS.

Thomas Weisel Partners telecom analyst Ned Zachar said, "Generally, results were better than lowered expectations." Thomas Weisel doesn't have an investment banking relationship with Sprint PCS.

For the full year 2002, the company dialed back its loss to $592 million, or 58 cents a share, compared with a loss of $1.27 billion, or $1.28 a share, in the same period last year. Full-year sales rose 24% to $12.07 billion from $9.73 billion.

Wall Street expected the company to report a 22-cent per-share loss, on sales of $3.1 billion in the fourth quarter, according to Thomson Financial/First Call. The full-year loss was expected to be 67 cents a share on sales of $12.1 billion.

Full-year 2003 earnings before interest, taxes, depreciation and amortization are targeted at $3.3 billion to $3.4 billion. The company also plans to ratchet down spending to $2.3 billion to $2.4 billion.

Investors applauded the performance in premarket activity, as Sprint PCS shares rallied 21 cents, or 5.7%, to $3.90.

"The fourth quarter marked the beginning of a shift in strategy," Sprint PCS Chief Executive Len Lauer told analysts on a morning conference call. "Be sure of this, our No. 1 financial goal is profitability -- free cash flow break-even by 2003."

The country's fourth-largest wireless services company added business in the fourth quarter, bringing in 250,000 net additional subscribers and 1.2 million for the year. In a prepared statement, Sprint PCS said the credit quality of new customers has improved. The rate at which customers left also improved on a sequential basis to 3.5% for the fourth quarter and 3.3% for the full year. Sprint PCS' Lauer told analysts the company expects churn to be reduced further on a quarterly basis this year.

Average revenue per user for the quarter and the year was $62, a slight improvement over $61 for the same periods last year. Lauer said revenue from customers' downloading games and sending email over their handsets will continue to contribute about $2 on average to the company's ARPU figure this year.

Capital expenditure was $590 million for the quarter and $2.67 billion for the year.