Sprint Nextel
That effect: Sprint's operating profit margin calculated on income before interest, depreciation, and amortization, or OIBDA, dropped 40% from the same period last year, to 9.5%. The good news here (of sorts) for Sprint is that it did not gain as many new subscribers as it had expected, so the loss was also lower than expected. Even so, the 1.6 million subscribers it did add to the network was the best number it has had in six years. It added a net total of 5.1 million subscribers for the year.
Sprint CEO Dan Hesse hinted during the earnings conference call that the company could probably have sold even more iPhones during the quarter if it entered a price war with its competitors. "We entered the fourth quarter expecting an even better performance, but during the quarter, we saw unprecedented discounting on devices, especially for our Apple products, which we decided not to participate in."
That sucking sound you may hear is Apple
The cost of Sprint's wireless products sold during the fourth quarter increased by 48% over the third quarter, yet net operating revenues for the company's wireless operations increased by only 5.4%. That equates to a net operating loss of $500 million for the company's wireless operations for the quarter, $256 million for the year. The net operating loss for Sprint's combined operations total $1.3 billion for the quarter, $2.9 billion for the year.
During the quarter, the company signed a new agreement with longtime 4G provider Clearwire
For 2012 and beyond, the best guidance we could get from the conference call was that costs of the iPhone and of network expansion would be such that operating income would get worse before it got better. Or, in the words of CFO Joseph Euteneur, "The expectation is that our OIBDA trough will be U-shaped through 2012 and then will start to ramp in 2013 followed by strong margin expansion in 2014."
Or i-shaped.
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