Sprint Nextel Corp. reported a drop in second-quarter profits on Wednesday due to its WiMAX initiative and takeover expenses.
The wireless provider said it earned $19 million during the three months that ended June 30, or 1 cent per share, compared with $370 million, or 10 cents per share, during the same period a year ago.
Sprint also said it earned 25 cents per share, a figure that didnt include one-time amortization. Still, the number was 3 cents higher than what analysts surveyed by Thomson Financial expected. Meanwhile, revenue increased by approximately 2 percent, from $10 billion to $10.16 billion. That missed Wall Streets estimate of $10.2 billion, according to the Associated Press.
Despite the losses, Sprint added 400,000 new subscribers, a surprising number given the companys recent troubles with its poor customer service ratings and signal quality. The company recently cut costs in certain areas (namely, it sliced through a layer of management) and said it would put more effort into training its customer service reps. The moves must have paid off, as Sprint now claims 54 million customers, which includes 155,000 brought in by wholesale partners and 33,000 from agents. It still lags behind competitors AT&T Inc. and Verizon Wireless, however.
Sprint announced a year ago it would build a nationwide WiMAX network with the help of Intel, Motorola Inc. and Samsung. But the initiative has cost more than expected, prompting rumors that Sprint would either spin off its WiMAX plans or join forces with someone in a position to help. In July, it did the latter, teaming with Clearwire Corp., the only other major holder of 2.5GHz spectrum in the country. The arrangement is expected to enable each company to increase capital efficiency and reduce overall network development and operating costs.
Meanwhile, Sprint still is absorbing expenses associated with its acquisition of Nextel in 2005.
The companys stock was down 35 cents during early afternoon trading on Wednesday. Shares were selling for $19.87.
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