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Sprint Loses $594M, Might Outsource Network Management

Shares of Sprint Nextel Corp. (S) had jumped nearly 8 percent by 3 p.m. Eastern, not long after the wireless provider reported its latest round of earnings, news complete with the good and the bad.

The good: Sprint didn’t lose as much money or subscriber as analysts had projected. The bad: Sprint still lost a lot of money and a lot of subscribers, and is talking about outsourcing its network operations. Well, that last bit is potentially bad for Sprint employees and offshoring opponents, anyway.

Sprint lost $594 million in the first quarter of 2009, which compares to a loss of $505 million in the same quarter a year earlier. Sprint this time was hit by one-time severance costs and lower sales, particularly among coveted post-paid customers. Revenue toppled by 12 percent, from $9.3 billion to $8.21 billion, as 182,000 subscribers defected from Sprint. Compared to the fourth quarter of 2008, however, when Sprint lost 1.3 million users, less than 200,000 is a vast improvement.

And CEO Dan Hesse put a positive spin on the situation: Sprint added a number of prepaid users through its Boost Mobile service, he said, marking the best “total subscriber sequential improvement” in the company’s history.

Still, he noted during Monday’s conference call with analysts, “we are far from satisfied with our post-paid subscriber numbers.”

News also broke on May 4 that Sprint is considering outsourcing management of its wireless network to Ericsson. The Wall Street Journal said the move would help Sprint cut expenses, which the carrier desperately needs to do. Up to 7,000 Sprint employees would become Ericsson workers, if the deal pans out.

Sprint’s shares were trading for $5.05, up 38 cents, at 3 p.m.


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