Stock Market Watch

Sprint Q3 Loss Narrows; Needs $7 Billion to Fund Costs (S)

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Sprint Nextel CorpSprint Nextel Corporation (NYSE: S), today, reported a narrower loss for the third quarter of 2011. The Overland Park, Kansas-based company also said that it needs $7 billion to fund costs.

Sprint also said that its recent deal with Apple Inc. (NASDAQ: AAPL) will cost it at least $15.5 billion over four years. This means that the wireless carrier will not turn in a profit on the iPhone before 2015. However, the company expects iPhone customers to be more profitable eventually than those using other smartphones.


Sprint, which has seen its shares punished by investors in recent weeks, said that it has a cash shortfall of approximately $2.2 billion in 2012 and another $5.2 billion in 2013. The company will also have to spend around $5 billion to upgrade its network to 4G. The company said that it will need to raise as much as $7 billion to fund these costs.

AT&T Inc. (NYSE: T) and Verizon Wireless, Sprint’s larger rivals, have already launched the latest 4G networks. However, Sprint has had difficulties due to the huge upfront costs to build its own network from scratch.

However, Sprint sees a profitable future with the iPhone. Dan Hesse, CEO of Sprint, said that there has never been a point in time since he joined Sprint that he didn’t want to carry the iPhone. Sprint expects a huge gain from its partnership with Apple, primarily due to the fact that iPhone customers are worth 50% more than average smartphone users, according to Hesse.

For the third quarter, meanwhile, the carrier reported 1.3 million new subscribers. The company posted a loss of $301 million, or $0.10 per share for the quarter, compared with a loss of $911 million, or $0.30 per share reported for the same period in the previous year.

Despite reporting a narrower loss, Sprint shares have fallen sharply in trading today. At last check, Sprint shares were down 2.96% to $2.62.

 

edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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