Sprint Reports Worse-Than-Expected Losses, Announces More Layoffs
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Most analysts were expecting Sprint to lose around 6 cents per share in its second fiscal quarter earnings. Instead, the third-largest wireless provider, facing intense competition from AT&T, Verizon and T-Mobile, on Monday reported worse-than-predicted losses of 19 cents per share.
Revenue totaled $8.49 billion, up from $7.75 billion a year ago. But the rest of the numbers did not measure up. In its press release, Sprint touted its operating loss of $192 million, compared to $358 million a year ago. Yet, one had to search the consolidated operations statement to get the bead on the real indicator: net income or loss. And, to that point, losses amounted to $765 million, higher than the $699 million in the year-ago quarter.
And in the face of its worsening financial situation, Sprint is cutting another 2,000 jobs and implementing a management review.
“[T]he company is announcing additional headcount reductions of approximately 2,000 positions,” Sprint said in a press release. “Inclusive of recent work force actions, total labor cost is expected to decline $400 million on an annualized basis, which will include internal and external labor costs.”
The layoffs will come on top of the thousands already enacted so far this year.
Marcelo Claure, the new CEO who replaced Dan Hesse in August, said in a prepared statement that Sprint has embarked on “a transformational journey.”
“While the company continues to face headwinds, we have begun the first phase of our plan and are encouraged with the early results. Every day we are focused on improving our standing with consumers, improving our network and controlling our costs.”
One way Sprint is trying to do that is by rolling out wireless pricing plans that undercut those of its rivals. The company started those actions in its second fiscal quarter (the just-passed third quarter) but its postpaid net losses came to 272,000 – analysts were looking for a loss of 187,000, according to reports. Sprint’s postpaid churn also hit 2.18 percent, compared to the 2.12 percent analysts had forecast.
“[W]e must continue to take bold actions to reach our goal of returning to growth in postpaid phone customers,” Claure said.
Meantime, Sprint also is continuing its 4G LTE rollout; the company is having to retrace its 4G steps because it opted to use the WiMAX standard several years back even as its competitors chose LTE. Sprint says it aims to finish the build out of the 800 MHz spectrum and ensure the 2.5 GHz spectrum covers 100 million people by year’s end.
Shares of Sprint had fallen more than 7 percent in after-hours trading.
