Sprint Nextel announced its Q2 earnings today, and the stock plunged after lower earnings. Sprint, which bought Nextel last August, has Q2 earnings of $370 million, compared to $600 million a year ago, before it bought Nextel. Revenues rose to $10 billion, lower than the average analyst forecast of $10.49 billion according to Reuters Estimates. The company reported revenue of $5.68 billion a year ago.
Sprint said it added 708,000 wireless retail subscribers in the quarter, compared with the average estimate of more than 940,000 from eight analysts contacted by Reuters. “They’re definitely losing market share, hemorrhaging it. I would say they’re getting crushed,” Stifel Nicolaus analyst Chris King said. Part of the reason for the disappointing subscriber growth were tighter credit controls, which forced some customers to leave, Sprint executives said.
Monthly churn was 2.1% in Q2, nearly double the comparable rate at VZW. And ARPU dropped below $62m down 6% from a year ago and 1% sequentially. It is approaching 5 million music downloads on its music service, the company said
One bright spot: data services: Sprint got an industry-leading $7.25 per month from customers for text-messaging, music downloads, and other services, up from $7 per month at the end of last quarter.
AP: The majority of Sprint’s new subscribers came through Boost Mobile, a prepaid service aimed at young people and customers with less-than-ideal credit. Boost customers posted lower average revenue numbers — about half of what postpaid subscribers spend — and a churn rate of 6 percent. In a conference call with analysts, Len Lauer, the company’s COO, said Sprint was rebuilding its marketing efforts. That will mean emphasizing its wireless Internet services while pulling back on advertising of Boost Mobile and Nextel’s push-to-talk services for non-business users.
Earnings release here. The earnings call transcript is here.
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