Everyone's least favorite wireless-services provider these days -- Sprint Nextel
What analysts say:
- Buy, sell, or waffle? Of the 32 analysts tracking Sprint Nextel, eight are bold enough to say "buy," 21 are on the fence with a hold, and three say to sell. In our Motley Fool CAPS investor database, 788 of our 84,000 users have rated the stock, giving it two stars.
- Revenue. Revenue is estimated to be $9.9 billion this quarter, down 5% from last year.
- Earnings. The average analyst is expecting earnings of $0.18 per share, significantly down from $0.29 last year.
What management says:
New CEO Dan Hesse already let the cat out of the bag as far as what kind of quarter to expect -- and it isn't pretty. The company did see subscriber gains in its wholesale and affiliate business, but noted, "These gains were offset by net losses of 683,000 post-paid subscribers and 202,000 traditional pre-paid users."
Unfortunately, these lost users are the ones most profitable to the company, so losing them to competitors AT&T
The balance of the year doesn't sound any better. Cutting to the chase, the company stated it is "anticipating continued downward pressure on subscriber trends, revenues, and profitability in 2008." Ouch.
What management does:
Sprint Nextel's ills are out in the open for all to see. Wireless metrics continue to show ugly trends:
03/06 |
06/06 |
09/06 |
12/06 |
3/07 |
6/07 |
9/07 |
|
---|---|---|---|---|---|---|---|
Net Subscriber |
1,338 |
704 |
233 |
742 |
568 |
373 |
(60) |
Churn |
2.3% |
2.4% |
2.8% |
2.7% |
2.7% |
2.5% |
2.7% |
ARPU |
$60.07 |
$59.75 |
$58.64 |
$57.55 |
$56.48 |
$57.19 |
$56.15 |
*In thousands.
One Fool says:
On top of its internal problems, Sprint Nextel is being forced to compete with nationwide unlimited-use plans from major rivals. Any revival of the company's next-generation network plans with one-time WiMAX partner Clearwire
Sprint Nextel's move to churn out some of its customer base encourages me. Maybe the company's making the hard choices to clean up its problems at last. But many core issues of customer satisfaction and service will take time to heal before positive growth resumes.
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