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Sprint (S) Q2 Loss Widens, Lags Revenues, Stock Tumbles

Sprint Corp.S a leading telecom operator in the U.S. providing wireless and wireline services to individuals, business enterprises and government agencies.

Sprint is progressing well on its network modernization and integration efforts, which should fortify its position in the wireless industry. The company's core platform business is dependent on the success of its multi-billion dollar restructuring program - Network Vision.

Additionally, Sprint is strategically poaching on its rivals' customers to boost its subscriber base. Recently, it offered AT&T's T DIRECTV customers a year of free service if they switch to its network. Sprint has also sketched out a lucrative "iPhone Forever" plan to be in the race with its peers for iPhone-loyal customers.

Nevertheless, the U.S. telecom industry is facing severe competitive pressure at present. Aggressive pricing competition and higher promotional activities are likely to hurt the company's financial results. In an effort to expand its customer base, the company is spending heavily on promotion and is also offering lucrative discounts. These strategies are likely to impact the company's wireless segment EBITDA margin.

Sprint currently carries a Zacks Rank #3 (Hold). The company has generated a substantial negative average earnings surprise of 55.19% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: Sprint incurs loss in Q2 of fiscal 2015. Net loss was significantly wider than the Zacks Consensus Estimate. Our consensus estimate called for an adjusted net loss of 9 cents per share and the company reported adjusted net loss was 13 cents per share. Investors should note that these figures take out stock option expenses.

Revenue: Sprint reported total revenue of $7,975 million which lagged our estimate by a substantial $191 million.

Key States to Note: In the reported quarter, Sprint added 553,000 retail postpaid connections. At quarter end, the company had 30.569 million retail postpaid connections, up 3.75% year over year. Retail postpaid average revenue per user (ARPU) decreased 10.83% to $54.02 per month. In reported quarter, Sprint lost 363,000 net prepaid connections but gained 866,000 net wholesale connections.

Stock Price: At the time of writing, the stock price of Sprint was down nearly 11.41% (55 cents) in the per-market trade on NYSE. Clearly the initial reaction to the release is negative. We believe that disappointing second quarter results and a significant fall in postpaid ARPU are the primary reasons for the negative sentiment.

Check back later for our full write up on this Sprint earnings report later!

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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