Sprint Nextel watched another 1.3 million wireless subscribers head for its competitors during the third quarter, leading the company to post a loss that sent its stock skidding Friday.
KANSAS CITY, Mo. — Sprint Nextel watched another 1.3 million wireless subscribers head for its competitors during the third quarter, leading the company to post a loss that sent its stock skidding Friday.
Dan Hesse, the Overland Park, Kan.-based company’s chief executive, told analysts that Sprint Nextel plans to work harder to attract new customers during the upcoming holiday season but acknowledged “we have yet to turn the corner.”
“We made good progress on our operational priorities in the third quarter and resolved some key issues,” he said. “Still, subscriber losses are too high.”
The nation’s third-largest wireless provider said it lost $326 million, or 11 cents per share, for the three months ending Sept. 30. It had earned $64 million, or 2 cents per share, in the same period a year ago.
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Excluding one-time items, Sprint Nextel said it would have broken even during the quarter. On that basis, analysts surveyed by Thomson Reuters expected a profit of 3 cents per share.
Sprint Nextel’s revenue fell 12 percent to $8.81 billion. Analysts expected $8.85 billion.
The company’s shares lost 31 cents, or 8 percent, to close Friday at $3.37.
Since its 2005 acquisition of Nextel Communications, the company has struggled with technical problems, unfocused marketing and difficulties integrating operations. Despite heavy investments to correct those problems, Hesse said the company still suffers from poor perceptions in the market.
Competing devices, such as Apple’s iPhone being sold through AT&T, haven’t helped, although Sprint has fought back with the Samsung Instinct and other comparable smart phones.
Sprint Nextel’s wireless business reported a 13 percent decline in revenue to $7.5 billion as its subscriber base fell by 1.3 million. That included 1.1 million valuable “postpaid” customers who have contracts. That was worse than in the second quarter, when Sprint Nextel lost 901,000 subscribers, including 776,000 postpaid customers.
Postpaid churn, or the percentage of customers canceling service each month, was 2.1 percent, up from 2 percent in the previous quarter but below the 2.3 percent rate a year ago.
Hesse said the company would focus on slowing the losses of postpaid customers in the fourth quarter and expected the churn rate to be similar to the third quarter.
“Stabilizing revenue will be a focus area of ours going forward,” he said.
JPMorgan analyst Mike McCormack said in a research note Friday that Sprint’s “subscriber trends and guidance … do not signal near-term improvement.” He said he would continue to warn investors away from the stock, which has lost more than 70 percent of its value this year.
On Tuesday, Sprint Nextel’s proposal to combine its high-speed wireless business with Kirkland-based Clearwire won approval from U.S. regulators, clearing the way for the first national WiMax network.
After the Federal Communications Commission approved the deal unanimously, FCC Chairman Kevin Martin said the new company will “solidify wireless as an additional broadband platform.”
The WiMax standard can transmit data to laptops and mobile phones up to five times faster than current technology.
Sprint hopes the deal gives it a leg up on larger rivals AT&T and Verizon Communications, whose high-speed wireless networks are at least two years away from completion.
The arrangement also lets Sprint, which will own more than half the new Clearwire business, scale back its own WiMax spending and focus on improving cash flow.
“It offloads some of the capital requirements,” while still letting Sprint share in any success the venture might have, said Will Power, an analyst at Robert W. Baird & Co. in Dallas, who has a neutral rating on Sprint shares and doesn’t own them.
Sprint Nextel sits behind AT&T and Verizon Wireless in third place with 50.5 million customers.
Sprint Nextel said last week it was planning to hold on to its Nextel-branded network, which operates on a separate technology and has been responsible for a good portion of the subscriber losses.
The faltering economy made it impossible to sell the network.
Information from Bloomberg News
is included in this report.