Sprint Nextel Corp. reported yesterday that its cell-phone business suffered a net loss of 300,000 monthly subscribers in the fourth quarter and that the struggling wireless company will cut 5,000 jobs.
The company’s stock plunged more than 7 percent after the financial update, which included a 2007 outlook shy of many Wall Street forecasts.
During the fourth quarter, Sprint added 742,000 total net subscribers and ended the period with a subscriber base of 53.1 million. Those numbers include wholesale subscribers to other brands of cell-phone service carried over the Sprint network such as Virgin Mobile.
The fourth-quarter net additions included 876,000 from wholesalers and affiliate companies that sell Sprint Nextel services, as well as 171,000 new customers for Boost, a wholly owned subsidiary geared toward younger consumers.
Offsetting the gains, however, was a net decline of 306,000 direct subscribers because of a continuing loss of Nextel subscribers because of complaints about worsening service quality. The Sprint brand subscriber base grew during the quarter, but not enough to offset the Nextel drop.
The company said the net decline in direct subscribers will continue early this year, but the company will show a gain for the full year.
The planned job cuts, most of them expected in the first quarter, will reduce the size of Sprint’s work force to fewer than 60,000 positions. The cuts are expected to be applied across the company’s operations.
Sprint said it expects its 2006 results to be in line with its previous guidance, with full-year revenue of $41 billion to $41.5 billion and adjusted operating income before depreciation and amortization of $12.6 billion to $12.9 billion. Analysts surveyed by Thomson Financial are looking for 2006 earnings of $1.26 per share on sales of $41.53 billion.
For this year, the company expects operating revenue of $41 billion to $42 billion. Analysts are looking for earnings of $1.32 per share on sales of $42.04 billion.
The update was issued after the close of yesterday’s regular stock session. Sprint’s shares rose 43 cents, or 2.2 percent, to close at $19.64 on the New York Stock Exchange.