Wednesday, April 27, 2011

Sprint Nextel (NYSE: S): Q1 Earnings Preview 2011

Sprint Nextel (NYSE: S), the third-largest US wireless carrier, is scheduled to release its first quarter earnings before the opening bell on Thursday, April 28, 2011. Analysts, on average, expect the company to post a loss of 22 cents a share on revenue of $8.19 billion. In the year ago quarter, the company posted a loss of 29 cents per share on revenue of $8.08 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.

In the preceding fourth-quarter, the  the Overland Park, Kansas-based company company's net loss was $929 million, or 31 cents per share, compared to a loss of $980 million, or 34 cents per share, in the year-ago period. Net operating revenues for the quarter grew 6 percent to $8.30 billion from $7.87 billion in the prior-year quarter. Analysts, on average, expected the company to post a loss of 30 cents a share on revenue of $8.17 billion. Sprint added nearly 1.1 million total wireless subscribers in the fourth quarter, driven by net postpaid subscriber additions of 58,000 and the company's best ever fourth quarter prepaid net subscriber additions of 646,000.

A its last earnings call in February, Sprint Nextel said that it expects postpaid subscriber net additions for fiscal 2011 and to improve total wireless subscriber net additions in 2011, as compared to 2010. Sprint said 2011 capital spending would be about $3 billion, up from its previous target for $2.5 billion due to a network modernization project it is kicking off this year.

expect Sprint to revert to a subscriber loss this quarter, particularly with Verizon (NYSE: VZ) now selling the iPhone.

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 20 4G devices, including the BlackBerry PlayBook tablet computer from Research In Motion Ltd. (NASDAQ: RIMM). 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 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. 

Early this year, 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.

The plans to start a service this year that will allow customers to make purchases with their mobile phones, ahead of a similar initiative from rivals Verizon Wireless, AT&T Inc. and T-Mobile USA. Sprint is working with payment networks and handset makers on technology called near-field communication, or NFC, which allows people with smartphones to make purchases by tapping them on or waving them in front of electronic readers in stores, said Kevin McGinnis, vice president of product platforms. The effort may give Sprint an advantage in attracting new customers and compelling existing ones to upgrade to the tap- and-go handsets. The competing joint venture, known as Isis, said in November its network may not be available to consumers until 2012.

Last month, Sprint shares fell sharply in the wake of an announcement that AT&T Inc. (NYSE: T) will acquire Deutsche Telekom’s unit. The merger would result in a wireless industry, dominated by two strong companies that control almost 80% of the U.S. wireless post-paid market.

In terms of stock performance, Sprint shares have gained nearly 13 percent over the past year.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire