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Sprint Pulls Up Lame Again

The big phone company misses first-quarter financial targets and trims 2003 guidance.

Updated from April 21

Sprint's

weak showing Monday signals that the strung-out telecom industry is still gasping for breath.

Fresh off a turmoil-filled period replete with sudden executive changes and efforts to solidify its finances, Sprint posted weak first-quarter numbers and trimmed guidance across the board. The company's landline phone business continued to shrink in lockstep with competitors, while the once-brawny

Sprint PCS

(PCS)

wireless unit saw diminishing per-customer returns.

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Investors were taking out their anger mostly on the wireless issue Tuesday, sending PCS shares down 73 cents, or 16%, to $3.73. The FON shares were off 39 cents, or 3.5%, to $10.88.

Sprint's FON group, the nation's No. 4 long-distance company, posted first-quarter adjusted earnings of 34 cents a share on sales of $3.6 billion, against 32 cents a year ago on revenue of $3.9 billion. Wall Street had expected first-quarter profits of 35 cents a share on sales of $3.7 billon, according to Multex. Including one-time gains and charges, latest-quarter earnings were $2.06 a share.

Sprint FON now says 2003 net income will be as low as $1.30 on about $14.1 billion in revenues. That's about 8 cents below earnings expectations and $1 billion shy of 2002 revenue.

"We faced the challenges of a sluggish economy and heightened competition in the first quarter," Gary Forsee, Sprint's new CEO, said in a press release. Sprint FON group slid 28 cents in postclose trading to $10.99, leaving it 6 cents below Thursday's closing level.

The news was worse at Sprint PCS. The wireless business showed a first-quarter loss of 18 cents a share. That's wider than the 15 cents PCS lost a year ago and worse than the consensus-estimate 13-cent loss. Sales rose by $100 million from a year ago to $2.9 billion.

Limping
Sprint's faltering stock

The company lowered its financial outlook for wireless as well, calling for a loss of as much as 50 cents per share, well below the 42 cents analysts had expected.

Sprint PCS's much-watched average monthly revenue per customer fell to $59 in the first quarter from the $62 in the fourth quarter and $60 for the same period a year ago. The company is now targeting monthly ARPU of $60 for 2003.

On the bright side, PCS added nearly 200,000 net wireless customers in the first quarter.