Tuesday, February 1, 2011

Sprint Nextel (NYSE: S): Q4 Earnings Preview 2010

Sprint Nextel (NYSE: S), the third-largest US wireless carrier, is scheduled to release its fourth quarter earnings before the market open on Thursday, February 10, 2011. Analysts, on average, expect the company to post a loss of 30 cents a share on revenue of $8.17 billion. In the year ago quarter, the company posted a loss of 34 cents per share on revenue of $7.87 billion.

Sprint Nextel Corporation offers wireless and wireline communications products and services to consumers, businesses, and government users in the United States, Puerto Rico, and the U.S. Virgin Islands.

The company has been steadily losing money and customers amid stiff competition. In the preceding third-quarter, the  the Overland Park, Kansas-based company company's net loss was  911 million, or 30 cents a share, compared to $478 million, or 17 cents, in the year-ago quarter. Revenue increased 1.4% to $8.15 billion from $8.04 billion. Analysts, on average, expected the company to post a loss of 28 cents per share on revenue of $8.03 billion. During the third quarter, Sprint gained approximately 644,000 subscribers, representing 364,000 retail subscribers and 280,000 wholesale and affiliate subscribers. This was reportedly the best wireless subscriber growth since 2006.

A its last earnings call in November, the company said that it expects postpaid, prepaid and total net subscriber results to improve in the fourth quarter. The last time Sprint posted a year of postpaid net customer growth was 2006. It had one growth quarter in 2007.

The company is rapidly expanding its 4G footprint and has continued to introduce newer devices  that can take advantage of this faster network and promote a better data usage experience for customers. HTC EVO 4G and Samsung Epic 4G have been two such successes for the carrier. So far, the company has unveiled 18 4G devices, including the BlackBerry PlayBook tablet computer from Research In Motion Ltd. (NASDAQ: RIMM). The company's 4G network has since expanded to 71 markets, and with reliable service, it’s appealing for business clients. In comparison, Verizon’s LTE 4G network began limited service at the end of 2010, while AT&T’s is still only in the testing phase.  Sprint recently announced a 2011 target for launch of tablets capable of connecting to its 4G high-speed wireless network. The move could produce upside to Sprint’s recorded revenue per subscriber, as new subscribers join Sprint’s network and existing subscribers add premium high-speed data plans to their service.

Sprint plans to emphasize its low-cost plans for unlimited wireless data use, a pitch that will grow more compelling as more people use mobile phones and tablets to surf the Web and watch video. The company offers unlimited data service for $69.99 a month, while AT&T eliminated its unlimited plan and Verizon charges more. Sprint is well positioned to leverage the growing wireless smartphone market in the U.S. with its rich portfolio of popular smartphone offerings and more advanced devices in the pipeline. 

The wireless carrier recently said that it would spend up to $5 billion over the next three years to upgrade its network. Sprint said it had reached deals with Alcatel-Lucent SA , Ericsson AB and Samsung Electronics Co. for the project. Sprint also said it would start phasing out the Nextel portion of its network beginning in 2013.

Among other developments, the company raised the price of its 3G Everything data plans by $10. The so-called “premium data” charge will bring Sprint’s 3G data plans into the exact same price range as their current 4G pricing plans.

Full Disclosure: None.

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