At least that's the message from Sprint Nextel (NYSE:S), with respect to its deteriorating wireless business. The company attempted to cast a positive light on the future as it reported first-quarter earnings that, for me at least, didn't exactly muster a lot of enthusiasm.

For its first quarter of 2007, the company lumbered across the finish line with $10.1 billion in revenue, essentially flat when compared to the same quarter a year ago. Profits sank into the red, coming all the way down to a $0.07 per share loss. The absence of dollars on the bottom line followed directly from Sprint Nextel's continued struggle to retain its highest-spending customers -- those annoying walkie-talkie-while-you're-trying-to-watch-a-movie group on the Nextel side of the business. (Just why do those folks always have the handset volume up as high as possible? Eeesh.)

Sprint Nextel reported that it lost 220,000 of its most lucrative customer base of post-paid subscribers, those that spent about $59 per month (ARPU) on service. But the company made up for this with additions to its base of prepaid, wholesale, and affiliate subscribers. The post-paid hemorrhaging dragged total net additions for the quarter down to only 568,000 -- not even half the 1,338,000 net additions a year ago.

Compared to competitor AT&T's (NYSE: T) net additions of 1.2 million and the 1.7 million of Verizon Wireless -- a joint venture between Verizon Communications (NYSE:VZ) and Vodafone (NYSE:VOD) -- Sprint Nextel has a ways to go in improving operations. Calculating Sprint Nextel's ARPU for both prepaid and postpaid subscribers, the first quarter value of $56.48 is still significantly lower than the $57.55 seen last quarter, so the company is making less money on current subscribers as well.

So with such a bleak picture for Sprint Nextel, why is the stock actually up? Well for one, many analysts had expected worse numbers from the company. The other is that investors apparently do believe operational issues have bottomed and things will get better for Sprint Nextel -- just not this quarter.

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Fool contributor Dave Mock neither tips cows nor packs meat. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Vodafone is an Inside Value recommendation. The Fool disclosure policy beats a wedgie any day.

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