Sprint Nextel Misses Where It Counts (S)

Sprint Nextel Misses Where It Counts

Sprint Nextel (NYSE: S ) reported earnings on July 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), Sprint Nextel beat slightly on revenue and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue improved and GAAP loss per share increased.

Margins dropped across the board.

Revenue details
Sprint Nextel booked revenue of $8.84 billion. The 27 analysts polled by S&P Capital IQ anticipated revenue of $8.73 billion on the same basis. GAAP reported sales were 6.4% higher than the prior-year quarter's $8.31 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at -$0.40. The 19 earnings estimates compiled by S&P Capital IQ averaged -$0.38 per share. GAAP EPS were -$0.46 for Q2 versus -$0.28 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 43.3%, 150 basis points worse than the prior-year quarter. Operating margin was -5.0%, 600 basis points worse than the prior-year quarter. Net margin was -15.5%, 530 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $8.76 billion. On the bottom line, the average EPS estimate is -$0.41.

Next year's average estimate for revenue is $35.16 billion. The average EPS estimate is -$1.47.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,998 members out of 2,460 rating the stock outperform, and 462 members rating it underperform. Among 404 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 297 give Sprint Nextel a green thumbs-up, and 107 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sprint Nextel is hold, with an average price target of $3.42.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

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 icon found on every comment.

Report this Comment On July 27, 2012, at 12:39 PM, henryg129 wrote:

Motely, you guys are never satisfied with S or CLWR- You constantly dog them. How about some credit where credit is due? I'm not saying they are out of the woods yet, but you guys are non-stop.
Report this Comment On July 27, 2012, at 12:49 PM, Plinkon wrote:

To some extent I agree with henryg129: I think it's been considered "un-Fool-ish" to invest in Sprint in recent years, and it's going to take awhile before the fundamental numbers come around to the point where that opinion will change. Personally, my investing style is more about "potential" than absolute underlying fundamentals, and I recognize that Sprint currently has more upside than downside potential.
Regardless, I think this article is terrible. Really really terrible. I don't care whether Seth has the same opinion as me regarding Sprint or not. To be honest, I appreciate hearing the other side of things, because sometimes it brings my own perspectives back into perspective.
But in this case, I just don't understand what Seth is doing. The title of the article says that Sprint "misses where it counts". And then the article does nothing but reiterate some of the fundamentals that Sprint reported in their quarterly report. Absolutely no mention is made of which of those fundamentals Sprint missed on; nor is any mention made of what actually "counts"!
Come on Seth - I understand that Fool needs you to create titles that increase readership, but how about you at least try to touch on the topic in the actual article too?
Report this Comment On July 27, 2012, at 1:34 PM, jhworley wrote:

The author clearly misses the fact that part of Sprint's losses this quarter are due to the extra costs incurred by shutting down thousands of Nextel towers earlier than scheduled. The cost per tower deactivation is far less in the long run than the cost to keep the towers activated. A single tower consumes as much power as four standard homes.
I agree with the previous two posters that Motley Fool has a history of continuing to bash Sprint.

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Sprint Nextel Misses Where It Counts

Comments from our Foolish Readers

Report this Comment On July 27, 2012, at 12:39 PM, henryg129 wrote:

Report this Comment On July 27, 2012, at 12:49 PM, Plinkon wrote:

Report this Comment On July 27, 2012, at 1:34 PM, jhworley wrote:

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