The depth of the challenge facing new Sprint Nextel chief executive Dan Hesse was laid bare today when the wireless carrier announced a $29.5 billion loss for the fourth quarter of 2007 and warned of ongoing troubles.
Sprint eliminated its dividend and wrote down the full value of Nextel Communications on its balance sheet. Sprint merged with Nextel in 2005 in a $70 billion deal, but the marriage has been a difficult one. Sprint also announced it had borrowed $2.5 billion to sustain business operations.
Sprint said 1.2 million wireless subscribers are expected to drop their service by the end of March. In the whole of 2007, that many subscribers abandoned Sprint. Meanwhile, chief rivals Verizon Wireless and AT&T gained subscribers.
The loss of $29.5 billion ($10.36 per share) compared to a profit of $261 million (9 cents per share) in the fourth quarter 2006. The loss for all of 2007 was $29.6 billion ($10.31) compared to $995 million (34 cents) in 2006. Overall revenues for 2007 decline slightly from 2006.
In early trading, Sprint shares sank 20 percent, according to Bloomberg. The stock had already lost a third of its value this year. The loss was the fifth-largest among S&P 500 companies since 1990, according to Bloomberg. – washblog