Sprint likely lags in wireless industry

[ComicalMoodyDan]

Sprint likely lags in wireless industry
By JASON GERTZEN
The Kansas City Star

The wireless industry is bustling, but several Wall Street analysts expect more bumbling from Sprint Nextel Corp. when the company reports third-quarter results next week.

Verizon Wireless and Cingular are expected to show they are claiming a greater share of the market, and the overall wireless industry is on track to post solid third-quarter growth in subscribers, sales of data services and average revenue from each customer, William Power, an analyst with Robert W. Baird & Co., wrote in a report to investors Tuesday.

“Sprint’s results are expected to lag the industry, though that shouldn’t be a surprise,” Power wrote. “The big question for Sprint will be its ability to instill confidence that the worst is behind it.”

Sprint, the nation’s No. 3 wireless carrier, is scheduled to release its third-quarter numbers Oct. 26.

The company’s shares plummeted earlier this year following its reporting of second-quarter results and a revised 2006 outlook that disappointed investors.

A Sprint spokesman Tuesday declined to comment about the assessment by Power and other Wall Street analysts.

In a recent interview with The Kansas City Star, however, Gary Forsee, Sprint’s president and chief executive officer, acknowledged that the company’s performance had not met his expectations.

He said aggressive actions would help turn the company around.

Power predicted that Cingular added 1.1 million subscribers and Verizon added 1.7 million, claiming nearly two-thirds of the 4.3 million new subscribers added by the top six wireless carriers during the third quarter.

Although a smaller regional carrier, Alltel is expected to report solid sales, profit and subscriber growth. The 110,000 additional Alltel subscribers estimated by the Baird analysts would be more than triple the number added during the same period a year ago.

As it continues to struggle with customer defections, Sprint is expected to show the addition of 553,000 subscribers during the period, Power stated. That would be worse than the second-quarter addition of about 670,000 and less than half of the 1.18 million added during the same period a year ago.

When looking at the most lucrative base of post-paid customers who sign up for monthly calling plans and longer-term contracts, Power expects Sprint to “add a paltry 60,136” subscribers.

Christopher C. King, an analyst with Stifel, Nicolaus & Co., projected even worse news from Sprint next week.

King reduced his estimate of Sprint’s new post-paid subscribers to a loss of 200,000 during the quarter “following our anecdotal checks of retail stores, Motorola contacts, and other wireless industry sources,” King wrote in a research report Monday.

Much of the weakness, King wrote, originates with problems Sprint is having with its Nextel-branded service.

Nearly 75 percent of the U.S. population is carrying a mobile phone, and average revenue coming from wireless voice calls is slipping rapidly, King wrote.

It appears it will take Sprint until late 2007 or early 2008 to gain significant traction, raising the question of whether the company will “simply run out of time for meaningful growth before it is able to markedly improve its operations,” King wrote.

Sprint shares closed Tuesday at $17.22, down 25 cents.

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