Sprint CFO seeing Pre shortages, no iPhone impact

Tue Jun 23, 2009 2:56pm EDT

* Still working to catch up on Pre order backlog

* Says new iPhone has not hurt Pre sales

* Hopes for revenue to flatten in quarters, not years

* Palm shares up 7 pct, Sprint shares flat at $4.83

NEW YORK, June 23 (Reuters) - Sprint Nextel Corp (S.N) expects shortages of Palm Inc's PALM.O high-profile Pre smartphone for a while but has not felt any impact from the new iPhone so far, Sprint's chief financial officer said on Tuesday.

Sprint -- the exclusive U.S. provider of Pre -- sees Pre, which sold out during its launch weekend at the beginning of June, as a key to stemming its subscriber losses. But some analysts have worried that tight supply would hurt sales.

"We still have a backlog of subscribers but it's not unmanageable and we get shipments every week," said Sprint CFO Bob Brust during a Webcast of an investor conference, adding that the shipments are increasing every week.

"We'll be short for a while but we're catching up," said Brust, who sees the phone attracting new customers as well as existing Sprint customers, potentially reducing its subscriber cancellation rate.

The Pre, which competes with Apple Inc's (AAPL.O) iPhone, went on sale roughly two weeks ahead of the launch of the newest iPhone -- the 3GS -- which sold about a million in its first weekend. In comparison, analysts estimate that Palm sold about 50,000 Pre phones in its first weekend.

Brust told investors that the rate of Pre sales does not appear to have been hurt by the new iPhone.

"We don't see any big change since the iPhone came out yet. That may happen," he said, promising a clearer update on Pre sales when Sprint reports second-quarter results next month.

Palm shares rose 79 cents, or 6 percent, to $13.65 on the Nasdaq after the comment. Sprint shares were unchanged at $4.84.

Brust, who took on the CFO job at Sprint in May last year, has been walking the tightrope between spending on marketing to improve Sprint's tarnished brand and cutting costs in the face of steadily declining revenue.

He sees phones like Pre and services such as Sprint's $50-a-month Boost unlimited services plan helping turn around revenue but said this would take time.

"The big thing for us is to turn that revenue around," said Brust, bemoaning revenue declines of about 3 pct per quarter in recent quarters.

"That's a really tough rate of decline to keep up with," he said. "So sometime out into the future, not years but quarters, I hope we'll see that revenue flatten out and then hopefully turn around, and it'll look like a different company financially when that day comes." (Reporting by Sinead Carew; Editing by Steve Orlofsky)