You can't always get what you want. But at least Sprint Nextel (NYSE:S) has the good sense to deliver where it matters most.

The phone service veteran saw first-quarter sales dropping 12% year over year to $8.2 billion, while GAAP losses expanded from $0.18 last year to $0.21 this time. Sprint had 1.25 million fewer post-paid subscribers (the more profitable kind that pays monthly bills on a plan) at the end of the quarter than at its start. So far, so bad.

But like I said, Sprint delivered where it really counts. $796 million of free cash flow nearly quintupled the $170 million produced in the year-ago quarter, and you should know that cash still is king. "We generated more than enough cash in this quarter alone to pay all of our 2009 debt maturities," said CEO Dan Hesse.

And the company has a few tricks up its sleeve for fighting Verizon (NYSE:VZ), AT&T (NYSE:T), and Deutsche Telekom's (NYSE:DT) T-Mobile in the coming quarters.

For one, Sprint could become the first American wireless carrier to outsource its network operations, in a cost-cutting move that echoes trends across Europe and the Far East. The Wall Street Journal reports that LM Ericsson (NASDAQ:ERIC) and Sprint are close to signing the dotted line on a $2 billion multiyear deal that could slash Sprint's network costs by as much as 20%. Keep an eye on that one -- Ericsson and its rivals are just getting started with us Yankees, here.

For another, Sprint is the exclusive carrier for the highly hyped Palm (NASDAQ:PALM) Pre smartphone, which looks like a worthy competitor to AT&T's Apple (NASDAQ:AAPL) iPhone. If Palm delivers on the pre-launch promises of sleek design and top-notch features, Sprint will prosper.

And then there's the WiMAX high-speed data service rollout to consider. Ten major metro areas from Honolulu to Philadelphia will have coverage by the end of the year.

There's a lot going on at Sprint. The company has invested heavily for its 4G leadership and an improved network. Now it's throttling back a bit on spending and improving its cash position. Don't count this Motley Fool Inside Value pick out just yet.

Catch that funky signal, Fool:

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Apple is a Motley Fool Stock Advisor selection. Sprint Nextel is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.