As expected, Sprint (NYSE: S) Nextel is cutting 4,000 jobs and shutting 8 percent of its stores as the company wrestles with increasing costs and subscriber losses. The move is designed to save Sprint between $700-$800 million by the end of the year. Details include:
– Of its 1,400 Sprint-owned retail outlets, about 125 will be closed. More than 4,000 third-party distribution points will be eliminated. The company has roughly 20,000 total distribution points, including nearly 1,400 retail locations.
– The layoffs, which include management, should be completed sometime within the next six months. The job reductions come on top of last year’s layoff of 5,000 jobs from Sprint’s nearly 60,000 workforce.
The announcement comes after another batch of bad subscription numbers: Net gains of 500,000 subscribers through wholesale channels, growth of 256,000 Boost Unlimited users and net additions of 20,000 subscribers within affiliate channels were offset by net losses of 683,000 post-paid subscribers — the mainline customers who agree to annual contracts and pay monthly bills. It also lost 202,000 prepaid users during the quarter.
Sprint has pointed to economic factors, such as the housing crisis, for putting downward pressure on profits. But investors and Sprint’s board of directors had been complaining about poor operational performance for months; that led to the resignation of Gary Forsee as CEO in October and the hiring of Dan Hesse, the CEO of Sprint spin-off Embarq, as president and CEO. Apart from poor performance, Sprint has to cope with the heavy costs related to the build-out of its WiMAX network. The company