New CEO Marcelo Claure has given Sprint the kick in the pants it so desperately needed, but it looks like his foot didn’t land soon enough to make a dent on Sprint’s fiscal second quarter, which ended Sept. 30. During the carrier’s earnings call Monday, Claure promised we’re just seeing the beginning of a new rejuvenated Sprint while simultaneously announcing big financial losses and layoffs that would cut Sprint’s head count by 2,000 employees.
Though [company]Sprint[/company] lost 272,000 postpaid customers, it actually reported an overall net gain of 464,000 subscribers. That was mainly due to an astonishing 827,000 wholesale connections from Sprint’s growing base of mobile virtual network operators (MVNOs), who buy minutes, SMS and data on its network and resell them to their own customers. A lot of those connections are probably due to FreedomPop, which is growing so rapidly it’s starting to build its own phones.
Still, growth is growth, and I’m sure Claure will take it. The former BrightStar CEO has only been at his new post for 85 days, taking over from ousted CEO Dan Hesse halfway into the last quarter. Sprint saw an incremental gain in its prepaid business of 35,000 new subscribers, but that’s actually tremendously good news as it had been shedding prepaid customers in droves after shutting down the Nextel iDEN network.
Sprint ended the quarter with 55 million customers, putting it just 2.1 million subscribers of fast-coming challenger [company]T-Mobile[/company]. If Sprint’s operational performance was lackluster, its financial performance was even more disappointing. Sprint reported a $765 million net loss off of revenue of $8.49 billion. That worked out to earnings per share loss of 19 cents, way off from the 6 cents per share loss Wall Street anticipated. That triggered an after-hours sell of Sprint stock.
In his first quarterly earnings call as Sprint CEO, Claure painted a pretty bleak picture of the company he took over. Hobbled financially and operationally and quickly losing the trust of its core customers, Sprint is definitely in need of make over, and Claure has definitely made several changes to the carrier in his first three months. Sprint has launched a slew of promotional plans, in particular its new iPhone for Life program, and hired new key executives. But Sprint is also trying to cut a lot of its costs, Claure said, starting with the 2,000 additional layoffs.