Sprint Takes a Beating – CEO tries to calm the waters…

In: broadbandreports.com|Site Feeds|VoIP

29 Feb 2008

Sprint’s announcement yesterday that they’re offering a $100 unlimited voice/SMS/MMS tier couldn’t overshadow the fact that their merger with Nextel has been, to quote the Wall Street Journal, a “deal from hell.”

Think just of the lost stock value: each side had a market capitalization near $33 billion when they first agreed to merge; now the whole company s market cap is $25 billion. Sprint s shares fell today to $7.75, the lowest level since October 2002. Financially, the hurt is there, too: The company drew down $2.5 billion on its credit line, stopped buying back stock and may need to raise capital, according to Oppenheimer & Co. analyst Timothy Horan.

New CEO Dan Hesse tried to calm investors during the conference call, but judging from analysis, didn’t do very well. Hesse did unveil a handful of news, including plans to release a iDEN WiFi BlackBerry, acknowledgment that they’re still working on a deal with Clearwire, and the announcement that dual-mode CDMA/WiMAX handsets should be out sometime this year. He also took time out of his busy day to make a few understatements:

As you may know, we have performed poorly in customer surveys that were taken last year. This has hurt our brand. We have done much to improve the network and care issues which drive customer dissatisfaction, but there is much more that still needs to be done.

Hesse didn’t particularly instill confidence by telling investors the company planned to lose another 1.2 million post-paid subscribers in the first quarter. We assume this doesn’t include the customer defections from Qwest’s plan to ditch Sprint and instead sign on with Verizon Wireless as a reseller.
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