Sprint Nextel showed more signs Thursday that its recovery will be long and painful as it recorded a massive fourth-quarter loss, predicted...

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KANSAS CITY, Mo. — Sprint Nextel showed more signs Thursday that its recovery will be long and painful as it recorded a massive fourth-quarter loss, predicted continued customer weakness and pulled the plug on dividends.

The nation’s third-largest wireless carrier also unveiled a $99.99 unlimited calling and data-services plan that establishes a new target in a growing price war but warned that wasn’t the “silver bullet” needed to cure its ills.

“Our business is not performing well right now,” Chief Executive Officer Dan Hesse told analysts during a conference call. “We are working aggressively to turn this around, but our financial performance will not improve overnight.”

Blaming credit-market instability, Sprint Nextel said it was not declaring dividends for the “foreseeable future” and was borrowing $2.5 billion from a revolving credit facility to improve the “financial flexibility.” It said it still had $500 million in the credit facility.

Company shares fell 86 cents, or 9.6 percent, to $8.09 Thursday after sinking to a new 52-week low of $7.75 earlier in the session.

The Overland Park, Kan., company said it lost $29.5 billion, or $10.36 a share, during the quarter ended Dec. 31. By comparison, it earned $261 million, or 9 cents a share, a year earlier.

Sprint Nextel said last month it would likely have to write off most of the remaining $30.7 billion in noncash goodwill value from the acquisition of Nextel and affiliates.

It has struggled since the purchase, plagued by technical problems, unfocused marketing and problems in merging work forces into a cohesive whole.

The hurdles have caused the company to fall far behind rivals AT&T and Verizon Wireless in attracting and retaining customers.

Not including the write-down and other one-time charges, the company said it would have earned 21 cents a share, higher than the 18 cents expected by analysts surveyed by Thomson Financial, based on the same criteria.

Revenue during the quarter slipped 6 percent to $9.8 billion from $10.4 billion a year earlier, just missing analysts’ expectations of $9.9 billion.

The company reported a net loss of 108,000 subscribers for the quarter, as an increase in customers through its Boost prepaid brand and wholesale channels partially offset the loss of 683,000 postpaid subscribers, who typically spend more on data services like texting and Web surfing.

Looking ahead, the company said it expected to lose 1.2 million more postpaid customers in each of the first two quarters of 2008.

Sprint Nextel reported quarterly postpaid churn, or the measure of monthly customers dropping service, remained at 2.3 percent and the average revenue per user declined about 4 percent from a year ago to $58.

Overall wireless revenues declined about 6 percent to $8.5 billion.

Hesse told analysts the company would continue to focus on improving customer service and making its price plans and services easier for customers to understand.

“When I look at the company I see great assets. … I also see a once-strong brand which lacks relevance and a clear message,” he said. “This will change.”

Among those changes is the “Simply Everything” plan, which would charge $99.99 for unlimited voice, texting and Web surfing as well as video and navigational services. A separate plan for unlimited voice calls only would cost $89.99.

Verizon, AT&T and T-Mobile last week offered plans charging $99.99 for unlimited voice calls. T-Mobile’s plan includes unlimited text and picture messaging, while unlimited data services cost extra for Verizon and AT&T customers.

While Raymond James analyst Rick Prentiss congratulated Hesse during the conference call, saying “this is the plan we were looking for,” other analyst were less impressed.

“We view today’s Sprint action as a ‘Hail Mary,’ leaving price as the only warhead left in the arsenal,” Bear Stearns analyst Mike McCormack said in a research note. “While we will be watching for share shift, we do not think pricing alone will drive subscribers to Sprint.”