Whew! Sprint just reported their third-quarter 2008 results (dramatic pause), a $328 million loss. The company also reported that its subscriber base dropped by 1.3 million. That's a lot of unhappy cell phone users, and a bunch of monthly checks that aren't going to show up when the rent comes due. In the year-ago quarter the company made a profit of $64 million.
The company had revenues of $8.8 billion and proudly reported that they paid off about a billion bucks of debt, while incurring a $694 million financing obligation on the sale-leaseback tower transaction. They're still kicking, however, and likely to be okay for a while. As of Sept. 30, 2008, the company still had $4.1 billion of cash and cash equivalents. The company has renegotiated its revolving credit facility for more flexibility in its financial covenants, for what that information's worth to anybody. It basically means they can lose more money and still finance day to day activities.
Dan Hesse, Sprint Nextel CEO:
"During tough economic times, we tightly managed our business to generate and retain cash and maintain substantial liquidity while continuing to reduce debt
Customer care metrics have improved steadily throughout the year, and external surveys are confirming we're providing a better customer experience."
A million people, apparently, were not impressed, and if you look at the company's track record, those metrics don't look too much improved to me. Indeed, the number of customers who flew the coop is higher this quarter, not lower. Sprint lost 1.1 million post-paid customers - that means use the phone and get a bill at the end of the month - and 329,000 prepaid users. That total was slightly offset by a gain of 130,000 wholesale and affiliate subscribers. That leaves Sprint plenty of paying customers: 37.8 million post-paid subscribers, 3.9 million prepaid subscribers and 8.8 million wholesale and affiliate subscribers.
Although the company spent less on capital investments, $485 million, down from $646 million in the previous quarter, that amount included $134 million related to WiMAX deployment. The Federal Communications Commission has now approved Sprint's spinoff-slash-merger deal with Clearwire. The regulators voted unanimously to permit Sprint Nextel to merge its new Xohm WiMax wireless broadband network operations with that of Clearwire Corp to create a new $14.6-billion venture under the Clearwire name. Google, Intel, and a group of cable companies are investing billions. The Justice Department has already said it will allow the Clearwire deal to proceed.
Now what's left? Sprint ends the third quarter a lot like me: wayyyy in debt. Their total debt at the end of the period was $22.6 billion. But don't blame me. I've already paid my Sprint bill this month - a whole day early.
The world's financial situation being what it is, the company says it expects to lose some more post-paid subscribers in the current (fourth) quarter, and predicted a decline in "Average Revenue Per User," or ARPU. In Jay-speak, that's "how much they can milk out of us every month."
Sprint still claims subscriber "churn" is going to improve, and that their infamous customer service will get better. Oh, and that they're going to return to profitability, and by the way, their iDen network, that they got when they bought Nextel, is not for sale. We'll see.