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Sprint Runs and Runs, Getting Nowhere

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When Sprint Nextel (NYSE: S  ) prepared for this week's first-quarter report, analysts expected disastrous results. Net losses were supposed to more than double year over year at $0.41 per share. That's on $8.7 billion in estimated sales, a 5% annual jump.

The numbers are in, and Sprint actually had some nice surprises in store. Analysts hit the top line on the nose (ouch!), but Sprint's $0.29 loss per share helped shares jump as high as 11% in next-day action. Factor in $0.18 of costs per share resulting from the Nextel network shutdown running ahead of schedule, and Sprint's core operations start to look pretty good.

AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) are slowly distancing themselves from the Apple (Nasdaq: AAPL  ) iPhone platform to protect their own margins. Sprint, on the other hand, is using the iPhone as a lifeline. The company added 263,000 contract subscribers in the first quarter, including 1.5 million iPhone users. Of the iPhone accounts, 44%, or roughly 660,000 users, were new names to Sprint. Without Apple, then, Sprint would have lost nearly 400,000 subscribers here.

Those numbers are just for the Sprint-branded side of the house. Looking deeper, the Nextel brand lost 455,000 contract customers this quarter. Of that number, 228,000 moved over to Sprint in advance of Nextel's planned demise, so you could argue that these migrant callers weren't really new to the company. Without them, Sprint hardly added any new contracts at all.

So I think it's too early to declare a turnaround here. Sprint is preaching to the choir of established fans -- and some of them are leaving. The wireless industry includes a ton of big winners but Sprint is not one of them.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (4) | Recommend This Article (3)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 25, 2012, at 10:28 PM, conradsands wrote:

    Nextel baggage being offloaded at a price. After the LTE network upgrade kicks in, they will be sitting nicely as Verizon and AT&T continue to charge outrageous prices. The fact remains that Sprint is the only U.S. carrier to offer new and existing customers the iPhone experience with unlimited data plans starting at $79.99 per month. An investment writer recently summed it up best: “Sprint now offers the best value proposition for a new smartphone user. I got my first smartphone on Sprint this fall because a new AT&T or Verizon data plan, without being grandfathered in with an earlier, lower price, is outrageous. My plan includes 450 afternoon mobile-to-landline minutes, unlimited other minutes, and unlimited texting and data for $79.99. Unlimited AT&T or Verizon plans would have approached $150, and to get a comparably-priced package, I'd have to settle on limited data or texting plans, which I'd have to constantly try to not blow through. Why get a smartphone if you can't have fun using it?” Sprint also tied for the number one spot among major wireless carriers for customer satisfaction, according to results from the 2011 American Customer Satisfaction Index.

  • Report this Comment On April 25, 2012, at 10:28 PM, conradsands wrote:

    Maybe consumers are finally noticing that AT&T and Verizon = The Most Expensive Wireless Plans in America. We know where Verizon and AT&T (both in the top 5 for corporate lobbying) get all that money to run commercials 24x7, pay out huge “fat cat” executive bonuses and hire armies of lawyers and lobbyists to try to push the U.S. market into a wireless industry duopoly -- the American consumer. This is how AT&T and Verizon fashion themselves as brilliant … with their political use of money.

    According to the report “Corporate Taxpayers & Corporate Tax Dodgers 2008-10,” two of the 25 companies with the largest total tax subsidies were AT&T at #2 ($14.5 billion) and Verizon at #3 ($12.3 billion). Also, there were 30 corporations that paid less than nothing in aggregate federal income taxes over the same period. These 30 companies, whose pretax U.S. profits totaled $160 billion over the three years, included Verizon. The report states the laws that allow this were not enacted in a vacuum, but rather were adopted in response to relentless corporate lobbying, threats and campaign support.

  • Report this Comment On April 25, 2012, at 10:30 PM, conradsands wrote:

    AT&T remains the worst carrier in the United States, according to an annual customer satisfaction survey compiled by Consumer Reports. The mobile provider ranked dead last for the third year in a row.

    In other news, in a poll that asked 4,040 smartphone users how many dropped calls they had experienced in a three-month period, AT&T — carrier of Apple's iPhone and iPad mobile devices — came in dead last among the country's four largest carriers.

  • Report this Comment On April 26, 2012, at 9:05 AM, mnosense wrote:

    Do you know how much Nextel's 800Mhz nationwide spectrum is worth of?

    You idiots didn't realize Sprint got a great price for Nextel. That time Nextel was debt free! Making $1B+ each quarters! Also came with 20M subs. In contrast, Sprint wireless had never made a penny, stuck in the 1900Mhz vs 900Mhz by Verizon.

    By the end of the day, Sprint is writing off Nextel for paper loss, do you know what paper loss is?

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