Sprint Sees $300 Million Charge - TheStreet

Sprint Sees $300 Million Charge

A plan to build a new billing platform goes by the wayside.
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The customer service bug is biting

Sprint

(FON)

again.

The phone giant on Monday posted financial guidance that was largely in line with what Wall Street was expecting. But the big Kansas telco also set plans for a $300 million charge as it continues to be plagued by customer-service issues at its

Sprint PCS

(PCS)

unit.

The charge will cover the costs of ending development on a new billing platform. Sprint said it will step up its outsourcing efforts to fill the gap. "The new arrangement will allow Sprint to focus its IT development efforts on key strategic requirements and it will enhance the customer experience as it eliminates disruptions associated with transitioning to a new billing platform," the company said, adding that killing the plan will save money.

Even so, Sprint has been punished in the marketplace by customer-service issues that have in part accounted for the company's rising churn, or monthly customer-loss rate.

The company also said it won't consider recombining the parent company with its wireless tracking stock before a Feb. 4 analyst meeting scheduled to discuss fourth-quarter results. Investors have been wondering when Sprint might act to bring the poorly performing wireless stock back in house.

TheStreet.com

reported last month that Sprint would

use February's analyst gathering as a launching pad for the PCS buyback effort.

On Monday afternoon, Sprint provided financial guidance that was mostly along the lines of what investors had expected. The company said it expects FON group earnings to hit Wall Street's $1.43-$1.45-a-share target on a continuing operations-adjusted-for-special-operations basis. Full-year adjusted earnings before interest, taxes, depreciation and amortization will be $4.4 billion, on a 7% slump in revenue.

But the wireless unit will be at the low end of the previous 43-cent-to-48-cent-loss projection. Sprint said the wireless unit's results hadn't been hurt by last month's onset of so-called wireless number portability, which allows customers to switch carriers while holding onto their phone numbers.

Sprint will take a $65 million pretax charge to cover 2,000 layoffs announced earlier this month, an event whose effect will be offset in part by a $50 million benefit to bad-debt expense on a receivables settlement with

MCI

.

On Monday, Sprint rose 7 cents to $15 and PCS slipped a dime to $4.57.