NEW YORK – Sprint Nextel Corp. posted a quarterly loss on Wednesday as some customers defected to rivals, but shares of the third-biggest U.S. mobile phone service provider rose 3 percent after it forecast an improvement in the current period.
Sprint reported a first-quarter loss of $211 million, or 7 cents a share, compared with a year-earlier profit of $417 million, or 5 cents a share, from continuing operations.
Earnings before amortization charges fell to 18 cents per share from 26 cents and missed the average analyst estimate of 22 cents, according to Reuters Estimates.
Quarterly revenue rose modestly to $10.1 billion from $10.07 billion, but that was below Wall Street’s projection for $10.3 billion.
“They’re mixed results,” said Stanford Group analyst Michael Nelson. “Revenue and EPS were both below my expectations, although on the positive side, wireless subscriber growth was a little better than expected.”
Sprint said it had lost 220,000 postpaid subscribers, who pay regular monthly bills for their cell phone service and are seen as more loyal and lucrative than prepaid users, who are more likely to switch carriers.
The loss in postpaid subscribers was better than the average forecast of 300,000 from six analysts contacted by Reuters.
“I think as we turn to positive net adds, you’ll see our ability to not only maintain or grow our share but also retain our key, most valuable customers,” Sprint Chief Financial Officer Paul Saleh said in a phone interview.
The postpaid customer cancellation rate, or churn, improved to 2.3 percent in the first quarter from “a little over 2.3 percent” in the fourth quarter, but was still higher than AT&T Inc.’s 1.3 percent and Verizon Wireless’ 0.89 percent.
Sprint, however, did forecast a decline in churn to 2 percent in the second quarter and reiterated its outlook for a net gain in postpaid subscribers.
Meeting that target would not be easy, analysts said, as Sprint was losing market share to other operators such as AT&T’s Cingular, and Verizon Wireless, owned by Verizon Communications Inc. and Vodafone.
“I think it’s possible, but it’s going to be challenging,” said Stanford’s Nelson.
Sur Terre/Soleil Securities analyst Todd Rethemeier said achieving postpaid subscriber gains would not necessarily mean Sprint’s troubles were over.
“They might get there,” he said, “but if they do, it’s because churn is getting that much better and not because they’re getting market share back.”
Rethemeier said Sprint faced challenges from Verizon and Cingular, which have positioned themselves as having the best voice quality in the industry, and T-Mobile, which has positioned itself as a low-cost provider for the youth market.
“Sprint has no positioning,” he said.
Sprint shares are down around 25 percent from their year high set in May 2006 as the company struggled to integrate the August 2005 acquisition of Nextel Communications and analysts criticized it for a weak line-up of cell phones.
The stock had risen in recent months on expectations that Sprint would return to postpaid subscriber growth in the current second quarter.
The company’s shares were up 60 cents at $20.61 in early afternoon New York Stock Exchange trade.
“The market’s having a good day, and that’s helping the stock,” Rethemeier said. “There were a few things to like, but there were a lot of things to not like.”
For the full year, Sprint reiterated an outlook for consolidated operating revenue of $41 billion to $42 billion.