Sprint raises earnings forecast; shares rise
(Reuters) - Sprint Nextel Corp (S.N) raised its earnings forecast for the year and reported higher-than-expected quarterly revenue as its wireless customers increased spending, and its shares rose nearly 16 percent.
The company also posted a wider quarterly loss because it took hefty charges for the planned shutdown of its old Nextel network.
Sprint said it had increased its target for 2012 operating income, excluding special items, depreciation and amortization, to a range of $4.5 billion to $4.6 billion from its previous forecast of $3.7 billion to $3.9 billion.
Because the company is shutting down its Nextel network earlier than it had previously expected, it may be able to generate savings from the change sooner than anticipated.
Sprint has been struggling to get the business on track for the last several years as its 2005 Nextel acquisition triggered years of customer defections.
Wells Fargo analyst Jennifer Fritzsche said the second-quarter results "more than any in recent history -- illustrate that the fruits of Sprint's labor are finally being seen."
R. W. Baird analyst William Power said Sprint's second quarter earnings before interest, tax, depreciation and amortization of $1.45 billion exceeded his estimate of $1.03 billion. Several other analysts also had estimates closer to $1 billion.
The No. 3 U.S. mobile service reported a loss of 246,000 subscribers in the quarter, compared with the average expectation of about 203,000 from five analysts contacted by Reuters.
The customer numbers included losses of 688,000 subscribers on the Nextel network. However, the company said that 60 percent of the customers leaving Nextel had moved to Sprint's network, which it is spending billions of dollars to upgrade.
In contrast, larger rivals Verizon Wireless (VZ.N) (VOD.L) and AT&T Inc (T.N) both added customers in the quarter.
Sprint, which committed to spend $15.5 billion on Apple Inc (AAPL.O) iPhones over the next few years, said that iPhone sales were slightly lower in the second quarter than in the first quarter.
The company's quarterly loss widened to $1.37 billion, or 46 cents per share, from $847 million, or 28 cents per share, a year earlier. The results included a $782 million depreciation charge for the network decommissioning and an impairment charge related to its Clearwire Corp CLWR.O venture.
Net operating revenue rose to $8.84 billion from $8.31 billion. Analysts expected $8.73 billion, according to Thomson Reuters I/B/E/S.
Sprint shares were up 15.7 percent at $3.90 in morning trading on the New York Stock Exchange.
(Reporting By Sinead Carew in New York; Editing by Jeffrey Benkoe, Maureen Bavdek and Lisa Von Ahn)
- Confusion as search for Malaysian jet spreads across SE Asia |
- Malaysia military source says missing jet veered to west |
- Toddler found with heroin at New Jersey daycare center
- Special Report: How China's official bank card is used to smuggle money |
- UPDATE 1-Missing Malaysian plane last seen at Strait of Malacca-source