Sprint (NYSE:FON) and its wireless counterpart, Sprint PCS (NYSE:PCS), reported fourth-quarter numbers Tuesday. While the traditional landline segment seemed a bit more stable despite the fierce competition for long-distance business, wireless losses widened. Meanwhile, rumors fly on Sprint's plans to outsource its wireless customer service segment.
The landline group's earnings came in at $360 million, or $0.40 per share, compared to $294 million, or $0.33 a share, in the year-ago quarter. Revenue came in at $6.7 billion, compared to $6.5 billion. However, the PCS group reported a widened loss of $322 million, or $0.31 per share, compared to a loss of $255 million, or $0.25 a share, last year.
In a portent of cost-whittling times ahead, the company cut jobs back in November, one of many telecoms that instituted major cost cutting as the industry battled it out.
On the wireless side of things, apparently one has to get pretty creative to deal with competitors such as BellSouth (NYSE:BLS) and SBC's (NYSE:SBC) Cingular, AT&T Wireless (NYSE:AWE), and Verizon's (NYSE:VZ) Verizon Wireless.
Speaking of which, wireless revenues continued on a healthier track, for anyone worried that Sprint would suffer the downside of number portability. They increased 8.4% as Sprint PCS added more than 1 million customers in the quarter, including 640,000 that it garnered through affiliates.
While the new number portability freedom may be of little harm now, just how turbulent customer churn will be in the future remains to be seen. Sprint said Tuesday that it expects the first-quarter churn rate to increase from 2.7% now (a figure that is flat with the third quarter) to 3%.
According to news agencies, Sprint is expected to announce a deal with IBM (NYSE:IBM), through which it will outsource its wireless help center to Big Blue, a move that could reduce Sprint's costs by $2 billion or $3 billion. Through the deal, 5,000 to 6,000 Sprint PCS jobs will be shipped over to IBM.
Also, a sales and marketing angle is expected to allow Sprint to peddle its wares to IBM's stable of corporate customers.
Sprint teased investors with the promise of more information tomorrow, regarding cost cutting and other value-focused endeavors; that's when more detail about the IBM deal is expected to come to light. For now, investors may applaud the potential to leave Sprint a lot leaner -- and with another channel of prospective clients.
Will Sprint be a winner in the long-distance wars? Or is everybody going to give up on landlines and go totally cellular anyway? And will people start switching cell phone providers like they switch toothpaste brands? Chitchat with other Fools about the company on the Sprint or Sprint PCS discussion boards.
Alyce Lomax welcomes your feedback via email.
