So Far the Palm Pre Isn't Helping Sprint

02Sprint this morning said its loss widened in the second quarter over the same period last year and that it lost even more subscribers this quarter than in the first three months of 2009. Those hoping that the Palm Pre, which hit store shelves at the start of June, would help the carrier are likely shaking their heads at Sprint’s consistent red ink. The only bright spot was its Boost prepaid cell phone business, which may face its own issues in the coming months as Sprint plunks down $483 million to buy Virgin Mobile USA — a deal it announced yesterday.

Sprint’s revenue fell 10.2 percent to $8.14 billion for the three months ended June 30 from $9.06 billion a year ago, and reported a loss of $384 million. That’s 11.6 percent wider than its loss of $344 million in the second quarter of 2008. About 257,000 customers defected from Sprint, leaving the carrier with 48.8 million subscribers. Of them, 991,00 were postpaid subscribers, who sign annual contracts. Their departure was offset by the gain of 938,000 prepaid customers on the Boost service that mostly use the carrier’s iDEN network.

Sprint has long been telling the market that it’s getting its financial house in order, yet despite a offering a service that is increasingly in high demand — wireless — it continues to bleed subscribers and profits. A few weeks ago the carrier said it was outsourcing its network operations to Ericsson, but it also said savings from that deal would be reinvested back into the network.

Sprint’s original problems with customer service stemming from poor integration after the Nextel merger may have been solved (it argues they have), but it is now threatened by defections to the AT&T  network for the iPhone. Since June, it has had a cool device in the Palm Pre, but it’s not looking like that’s cool enough to keep subscribers on board. Going forward, as Sprint continues investing in the network without actually having to run it, it looks like the carrier’s focus is on the prepaid business. Maybe it can become the ultimate hybrid of a mobile virtual network operator.

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