sank to a new 52-week low, continuing a slide prompted days ago by the company's lackluster third-quarter earnings report.
The stock was recently down 62 cents, or 24.5%, to $1.91. Sprint Nextel shares have now lost more than half their value in November.
On Friday, the wireless phone shop said it swung to a third-quarter loss of $326 million, or 11 cents a share. Excluding items, Sprint merely broke even, falling short of Wall Street's average estimate for a profit of 3 cents a share.
Sprint also saw wireless customers decline by a net 1.3 million, including losses of 1.1 million post-paid customers and 329,000 prepaid users.
Sprint's results appear even more dreadful when compared to those of rivals
. While Sprint was losing subscribers, Verizon added 2.1 million net wireless subscribers in the third quarter.
iPhone 3G helped AT&T realize a net gain of 2 million wireless subscribers in the third quarter, much more than analysts expected to see.
Sprint's subscriber base has
by 6.3% over the past year, and that in a year when the industry's subscriber base has
by 7%," wrote Craig Moffett, analyst with Sanford Bernstein, in a post-earnings wrap. "In short, Sprint's market share remains in free fall."
Analysts also were concerned over an amendment Sprint made to its existing credit facility, also announced Friday, which includes a cut in its revolving credit facility to $4.5 billion from $6 billion. Other changes to the existing credit agreement include an increase in Sprint Nextel's permitted debt to earnings before interest, tax, depreciation and amortization, or EBITDA, ratio to 4.25 times from 3.5 times.
Moffett says the change is good news on the surface. "As feared, the price is materially higher borrowing cost, and a reduced credit line," he writes. "The benefit, however, is much lower risk of default, if only because the banks have allowed for a much larger decline in Sprint's EBITDA than we, or the market, has projected."
Another change to the credit facility increases the interest rate on borrowing to the London Interbank Offered Rate, or LIBOR, plus a margin ranging between 2.50% and 3%, depending on Sprint Nextel's debt ratings. The LIBOR rate is priced daily and follows the interest rates that banks borrow funds from other banks. Under the previous agreement, Sprint borrowed from the credit facility at LIBOR plus 75 basis points.
"The interest rate on borrowings, which was LIBOR plus 75 basis points, is now LIBOR plus a margin depending on the company's credit rating," writes Moffett. "As a 'BB'
debt-rated borrower, the applicable margin is 2.75%. This increase means Sprint will pay an extra $20 million annually in interest, or a $0.007 hit to
earnings per share."