Sprint Nextel reports 95% decline in 2Q profit

Sprint Nextel Corp., the third-biggest U.S. mobile-phone company reported a steep decline in second-quarter earnings blamed upon lower mobile profits, start-up costs from its WiMAX initiative and higher merger costs.

The Reston, Virginia-based Company said second-quarter profit dropped 95 percent to $19 million, or 1 cent a share, from $370 million, or 10 cents, a year ago. Sales ascended 1.5 percent to $10.16 billion from $10.01 billion, close to the analysts' estimates. Earnings excluding items and amortization were 25 cents a share, down from 32 cents a share.

For the first time in four quarters, Sprint added 16,000 post-paid customers. In the last three quarters it has lost 714,000 such customers, considered as a source of high-margin revenue in the industry. The rate of customer turnover or churn fell to its lowest level in two years, going down to 2 percent from 2.3 percent in the previous quarter.

Total subscribership rose 5% from a year earlier to 54 million customers with the addition of 373,000 subscribers. Rivals AT&T and Verizon Wireless however, managed to gain 1.5 million and 1.3 million subscriptions respectively.

AT&T is soaring with its exclusive tie-up with the Apple iPhone (the combination of iPod media player with an email handset.) The San-Antonio based company said last month that clients activated 146,000 iPhones in the first two days of its sale agreement.

On the other hand Verizon Wireless, the joint venture of Verizon Communications and Vodafone group is selling Samsung Electronics Co.'s UpStage, which also contains a music player.

Sprint has been struggling to compete with the aforementioned rivals and is constantly pursuing new strategies for growth.

Sprint revised its 2007 revenue projection of $41 billion to $42 billion. Shares of Sprint went up 78 cents, or 3.9 percent, to $21 in early trading. They closed at $20.22 at 4 p.m. yesterday in New York Stock Exchange composite trading. Before today they had gained 7 percent this year.