NEW YORK (AP) — Sprint Corp., the third-largest wireless carrier in the U.S., reports its second-quarter results before the stock market opens Tuesday. It's the first report since Sprint sold a controlling stake to Softbank Corp. of Japan.
WHAT TO WATCH FOR: Masayoshi Son, the dynamic CEO of Japan's Softbank, thinks he can fix Sprint, but he has his work cut out for him: Sprint has posted straight quarterly losses in 2007. Under CEO Dan Hesse, subscriber figures have improved the last few years, but then weakened precipitously earlier this year.
Softbank's acquisition of 78 percent of Sprint closed July 10, but the company's courtship of Sprint had financial effects long before that. Softbank lent Sprint money that enabled it to launch a bid to buy out the minority shareholders of Clearwire Corp., a wireless broadband network operator. Sprint already owned a majority of Clearwire, and will now be able to integrate its vast spectrum holdings with its own, for faster broadband speeds and higher capacities in the future.
Son paid $21.6 billion for the Sprint stake. Shareholders got $7.65 per share. The question is now what other moves Son can make to revitalize Sprint. AT&T and Verizon are both vastly bigger, have much stronger financials and are ahead on building out next-generation data networks. No. 4 T-Mobile US is putting pressure on Sprint from below with innovative pricing plans and, for the first time, the iPhone.
"We believe the new Sprint faces a wireless industry that is becoming increasingly competitive," said Canaccord Genuity analyst Greg Miller. Miller believes Sprint will post a net loss of 1 million subscribers from contract-based plans in the period, due to the impending shutdown of the obsolete Nextel network. That would be the highest subscriber loss in four years. Contract-based plans are the most lucrative.
WHY IT MATTERS: Sprint has 55 million devices on its network, and it's in uncharted territory with a new owner.
WHAT'S EXPECTED: Analysts surveyed by FactSet expect Sprint to report a loss of 30 cents per share on revenue of $8.7 billion.
LAST YEAR'S QUARTER: Sprint reported a loss of $1.37 billion, or 46 cents per share, on revenue of $8.8 billion.