Sprint Struggles to Keep Pace With Rivals

With Sprint still losing money, market share and subscribers, CEO Dan Hesse was blunt this morning in admitting the No. 3 wireless carrier in the U.S. has much to do to correct its trajectory.

“We’ve made progress and are delivering results in customer service and brand initiatives, but we have yet to turn the corner,” Hesse told investors during Sprint’s third-quarter earnings conference call.

Sprint today reported quarterly revenue of $8.8 billion — a 3 percent drop from the previous quarter — which led to a net loss of $326 million, or $0.11 per share. That’s compared to a $64 million profit and $0.02 per-share profit for the same period a year ago. The dismal financials didn’t come close to analysts’ expectations, with Wall Street predicting a profit of $0.03 per share on $8.85 billion in revenue for the quarter.

The report comes as Sprint is looking to not only shore up its own troubled business, but to extend its efforts in areas like wireless data, which has emerged as a cash cow for many carriers.

At press time, shares of Sprint were trading down more than 12 percent, at $3.22.

Despite the numbers, Sprint’s chief is bullish that his company’s network advancements and spending reductions will bring better news next year. He also said that the present economic downturn hasn’t done much to worsen the company’s situation.

“There has been some contraction in the enterprise wireless space, but we’re still seeing little impact from current macroeconomics,” Hesse said, adding he is focused on network quality as he views it “central to customer experience.”

Keeping customers happy is critical for Sprint, which is struggling even as its two larger rivals, AT&T and Verizon Wireless, are reporting healthy gains in all areas.

AT&T’s total subscriber base is now 74.9 million, while Verizon Wireless now boasts 84 billion subscribers after regulatory approval of its $28 billion acquisition of rural carrier Alltel.

Sprint, however, lost 1.3 million customers in third quarter, with its total subscriber base now at 50.5 million — a drop from where it stood a year ago, at 54 million. Customer churn also grew, increasing to 2.15 percent, compared to 2 percent in the second quarter, and 2.3 percent a year ago.

Hesse noted Sprint’s increased cash flow, improved customer service efforts and the recent federal approval of the Sprint-ClearWire WiMAX deal earlier this month as positive initiatives that will eventually drive profits up.

Sprint also launched the initial leg of its national WiMAX network in Baltimore, making it the first carrier to have a 4G network.

The company has also made headway in cutting costs in some areas. Customer support calls have declined 20 percent since last year, enabling the company to shutter 11 call centers, Hesse said. The carrier also paid down $1 billion in credit debt in November as well, he added.

Sprint executives also stressed the importance of an expanding device lineup, which will include the Samsung Rant and Highnote devices, as well as the LG Lotus, HTC TouchPro and a Motorola i576 handset.

“We have made progress in delivering results in line with our expectations and we have disciplined spending now,” Hesse told investors. “The turn around will happen gradually.”

It’s just not likely to happen by year’s end, though, as even Hesse acknowledge that the forecast for fourth quarter isn’t much rosier than it had been for third.

“It’s too early to say we’ll get more customers, as we need to stabilize and have to make improvements on churn,” he said. “But there is potential and the market characteristics are there for us to achieve our goals.”