Sprint Posts $1.6B Loss As Subs Exit

Third-place wireless carrier Sprint said it lost $1.62 billion, or 57 cents a share, in the fourth quarter of 2008 as subscribers continued to leave the carrier.

The carrier said it lost 1.3 million subscribers in the quarter, bringing it to 49.3 million subscribers by the end of 2008, compared to 53.8 million a year ago same period.

The quarterly loss announced this morning is not as severe as the loss it tallied during the same fourth quarter a year ago when it posted a loss of $29.3 billion, or $10.31 a share.

The third-place carrier reported fourth quarter revenue of $8.4 billion, a 14.4 percent drop from $9.8 billion in revenue during the same period a year ago. Full-year 2008 revenues were $35.6 billion, down by 11 percent from 2007.

Sprint’s decline in wireless subscribers led to a decline in wireless service revenue which was $6.6 billion for the quarter — a 13 percent year-over-year drop and 4 percent less than in the third quarter of 2007.

Sprint CEO Dan Hesse told investors during today’s earnings call that he expects subscriber levels to improve in 2009, citing new smartphones such as the Palm (NASDAQ: PALM) Pre, as compelling products for new subscribers. Sprint is the exclusive carrier for the new Palm WebOS handset expected to debutby June.

“We’re focused on customer improvement which is the foundation of improving our brand and bullish on the potential of Pre for both consumers and businesses,” Hesse told investors. Sprint said smartphones now represent 30 percent of its handset sales.

“We have still not turned the corner, and the challenges with the economy haven’t made the job easier,” said the CEO who is one year into his role as Sprint’s leader.

The news comes at a critical time for Sprint, as it continues to fall further behind the nation’s No. 1 carrier, Verizon Wireless, and second-place carrier AT&T. As of the close of fourth quarter 2008 AT&T said its total subscriber base was 77 million. Verizon Wireless currently serves just over 80 million.

Sprint reported capital expenditures of $548 million in the fourth quarter, as compared to $485 million in the third quarter. The increase reflected higher spend in both wireless and wireline segments, said the carrier which spent $90 million in the fourth quarter, and a total of $560 million during the year, on its WiMAX deployment efforts.

In late January Sprint dramatically stepped up cost-cutting efforts, and cut 8,000 jobs, which represented 14 percent of its workforce. The labor reduction, which includes 850 employees who accepted a voluntary layoff package last year, will save $1.2 billion annually, the company has said.