Sprint Nextel Posts Loss Of $29.5 Billion
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
The third-biggest American wireless carrier, Sprint Nextel Corp., posted a $29.5 billion loss and scrapped its dividend after writing down most of the Nextel Communications Inc. acquisition from two years ago.
Sprint sank as much as 13% in New York trading and its credit-default swaps reached a record. The company reported a fourth-quarter net loss of $10.36 a share. Sales fell 5.7% to $9.85 billion, missing analysts’ estimates, and the carrier borrowed $2.5 billion under a credit line.
The writedown put Nextel’s value at 80% less than when it was acquired and the loss is the fifth-largest among Standard & Poor’s 500 Index companies since 1990. Sprint expects 1.2 million subscribers to leave this quarter, as many as it lost in all of 2007. The company’s chief executive officer, Dan Hesse, who took over in December, said business is deteriorating.
“We need an articulated strategy of how he’s going to turn around the business,” said Michael Nelson, an analyst at Stanford Group Co. in New York who had predicted subscriber losses of 400,000 this quarter.
He advises holding the shares. “I don’t expect it to be a pretty picture.”
Sprint, based in Overland Park, Kansas, fell to its lowest level since October 2002. The stock dropped 86 cents to $8.09 at 4 p.m. on the New York Stock Exchange and earlier reached $7.75, its steepest percentage decline since January 18. The shares had fallen 32% this year before yesterday.
