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Sprint regroups after troubles
Question of the Day
Sprint Nextel Corp., the embattled Reston telecommunications provider, is dusting itself off and gearing up for the future.
It’s been a rough year for Sprint, which took a loss of $192 million in the first half of 2007.
Shares of Sprint took a steep dive this month, falling 20 percent since July 20 to $18.26 yesterday. The company has struggled with its 2005 merger with Nextel. The incompatibility of the two networks (Sprint’s CDMA and Nextel’s iDEN) created a major obstacle in the merger, and the combined firm has had trouble marketing to consumers.
“The merger has not been executed well,” said Kent Custer, an analyst at A.G. Edwards & Sons Inc., a St. Louis-based financial services firm.
“Nextel has had its problems with capacity constraints and product pricing and they have been moving a lot of the people around,” he said.
In addition, the high level of competition in the industry and a turnover rate of 3 percent for core subscribers has placed extra pressure on the telecommunications giant.
Quite a few Sprint users were lost when Apple’s sleek new IPhone was introduced on the AT&T; network.
But Sprint is not dwelling on the past.
The company has been investing heavily into its newest business venture: a WiMAX initiative called XOHM (pronounced ZOAM).
The company boasts that the unreleased fourth-generation wireless network will allow users to access the Internet on their mobile devices at broadband speeds of 2-to-3 megabytes per second, more than five times faster than the current network.
“This is a year of investment for our company,” said James Fisher, a spokesman for Sprint Nextel.
“Rather than focusing on business growth, we’re working to improve some of the basic challenges we are facing as a company,” he said.
Sprint plans to invest nearly $5 billion on its new WiMAX technology by 2010 and hopes to reach 100 million customers by the end of 2008.
“This has the potential to be a game-changing network,” said Chris Larson, an analyst at the Credit Suisse Group, a Zurich-based financial services firm.
“It’s a really good technology and it has the ability to help differentiate itself from its competitors,” he said. “But we’ll only know when we get there.”
By Michael Widlanski
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