Sprint Nextel Says It Will Eliminate 5,000 Jobs

The New York Times
Sprint Nextel Says It Will Eliminate 5,000 Jobs
By THE ASSOCIATED PRESS

RESTON, Va., Jan. 8 (AP) — Sprint Nextel reported Monday that its cellphone business suffered a net loss of 300,000 monthly subscribers in the fourth quarter and that it would cut 5,000 jobs.

Shares of the company plunged more than 8 percent after the financial update, which included a 2007 outlook that fell short of many Wall Street forecasts.

Sprint said that it expected 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 a share on sales of $41.53 billion.

For 2007, the company expects operating revenue of $41 billion to $42 billion. Analysts are looking for earnings of $1.32 a share on sales of $42.04 billion.

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 cellphone service carried over the Sprint network, like 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 for younger consumers.

Offsetting the gains, however, was a net decline of 306,000 direct 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 would continue in early 2007, but that the full-year figures would show a gain.

The planned job cuts, most of them expected in the first quarter, will reduce the size of Sprint’s work force to just below 60,000 positions. The cuts are expected to be applied across the company’s operations.

The update came after the close of Monday’s regular trading session. Shares of Sprint fell $1.64, to $18, in extended trading after rising 43 cents, or 2.2 percent, in regular trading.