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.