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Consistent Strategic Policies Remain Key In Determining Sprint's Long-Term Performance
- Competition in the industry has adversely affected the company’s top and bottom-line numbers in the recent past.
- Top-line numbers and ARPU are likely to remain pressurized due to competitive pricing strategy opted by S.
- Cost cut efforts will positively affect bottom-line numbers in the future.
- Sprint reported a dismal second quarter across the board.
- Q2 EPS was negative $.19, missing estimates by $.13.
- Management cut guidance on EBITDA.
- The stock price was climbing leading up to earnings and then fell sharply from over $6/share to under $5/share.
- I predicted that the new plans weren’t going to provide risk adjusted returns, but I was nowhere near this bearish.
Sprint's Network Strategy Key To Sustainable Growth
- Sprint has embarked on an aggressive price campaign that will stem subscriber losses in the short term, but is limited by tight margins.
- Cost cutting measures have had an impact on investor confidence but will be short-lived.
- The key to Sprint’s success will be a clear network strategy that sells its differentiated 2.5 GHz network.
- Sprint officially announces the commencement of layoffs.
- Investors should continue avoiding the stock.
- Cost cuts were anticipated amid the wireless pricing war and investors were warned that the race to the bottom isn't a good investment thesis.
Sprint Focuses On Cutting Costs And Growing Organically As New CEO Makes Moves
- Offers new cheap plans for family and individuals.
- The company offers the best deal for its iPhone 6 subscribers.
- Network improvements remain core focus for company.
Sprint Takes The Right Approach To Survive Tough Competition Across Its Industry
- The company has opted for competitive pricing to address competition.
- Recent deals will help strengthen its subscriber base, but will likely adversely affect top-line and ARPU growth.
- The company needs to ramp up network upgradation efforts across covered markets to enhance customer experience.
Sprint: Claure Off To A Good Start, But The Road To Recovery Is Long And Uncertain
- Incoming CEO Claure made a great impression in his first month on the job.
- Investors like the unlimited iPhone deal, in an attempt to aggressively grow the customer base.
- The smaller scale and leverage remain key disadvantages in an industry that's very competitive.
Update: Investors Too Impressed With New Sprint CEO At Communacopia Conference
- Sprint's new CEO Marcelo Claure impresses the market at investor conference.
- Investors should continue avoiding the stock and use the recent gains to exit positions.
- Recent stock gains aside, the disruptive pricing was anticipated and will eventually hit the stock when quarterly losses mount from a pricing war.
Should Subscribers Rethink Switching From Sprint To A Competitor?
- Company will change dynamics of industry despite being late entrant in price war.
- It is important for S to continue investments in network.
- Needs to utilize its largest spectrum in industry to improve its network experience.
- After long deliberation, Sprint has decided not to pursue the T-Mobile acquisition anticipating a lengthy regulatory review.
- Sprint lost about 3.5 million postpaid customers over the last 24 months. In the last six quarters, it lost 2.8 million postpaid customers.
- RootMetrics wireless network quality ranking for the first half of 2014 shows Sprint has fallen behind T-Mobile and now is in the fourth place among the national wireless carriers.
- Sprint recently announced new pricing plan for families, new pricing for other categories are expected to follow.
- Sprint is planning to offer low price plans and lower cost smartphones while featuring larger data allotments.
- The move seems to me like a Hail Mary pass, designed to help the struggling company retain subscribers and compete against larger rivals.
- I predicted that Sprint would have to do something to retain subscribers or risk being acquired by a larger company, but I thought the company would acquire smaller carriers.
- Trying to compete on cost against larger companies is a risky move. It could leave Sprint with smaller margins, less profit, and more vulnerable than ever to takeover.
- Sprint ending the pursuit of the T-Mobile merger crushed the stock.
- Management suggests disruptive pricing to hit markets next week.
- Lack of consistent profits and a high debt load question the suggested pricing plans.
Tue, Nov. 18, 2:42 AM
- In another attempt to turn around the country's struggling, third-place wireless carrier, Sprint’s (NYSE:S) new CEO Marcelo Claure is shuffling the company's top execs.
- In a recent memo, Claure named more than two dozen executives who are to be part of his core leadership team and said that three senior Sprint execs, including chief marketing officer Jeff Hallock, would be departing.
- Last quarter, Sprint lost 336K customers, more than any of the big four U.S. carriers.
- Previously: Sprint cutting another 2K jobs
Fri, Nov. 7, 7:51 AM
- Sprint (NYSE:S) discloses it will take an additional $105M in charges for severance and related costs in Q3, as it implements its plan to eliminate 2,000 more jobs in an attempt to hit $1.5B in annual cost cuts.
- Sprint says the charge is in addition to a previously reported $160M charge related to severance and other items stemming from the job cuts.
- S +1.1% premarket.
Tue, Nov. 4, 12:44 PM
Tue, Nov. 4, 12:38 PM
- William Blair's Jim Breen, reiterating an Underperform on Sprint (S -16.9%) following its disappointing Q3 numbers and EBITDA guidance cut: "Sprint reported a Sprint-platform postpaid churn rate that was its highest in the past six years ... postpaid and prepaid losses reflect intense competition, specifically related to competitors’ early- termination fee reimbursements."
- Breen expects Sprint 'will struggle to win high-end subscribers from Verizon and AT&T as their 4G LTE lead and shared data plans will likely have the effect of decreasing churn even further." He also notes improving Sprint's oft-criticized network quality will require significant capex; Sprint just slashed its 2014 capex budget by ~$1B.
- Canaccord's Greg Miller (Hold) isn't convinced Sprint's relatively positive September metrics spell a turnaround. "Preliminary reports have not consistently translated into sustainable trends that improve shareholder value over the long-term ... We look forward to additional details on yet another strategy to restore the company and make it more competitive and successful."
- Goldman (Neutral) is more encouraged by the September numbers, but also expects the costs of boosting subscriber adds to take a toll on ARPU and EBITDA. It expects postpaid phone net losses to fall to 240K in 2015 from 2.2M in 2014.
- On the CC (transcript), Sprint said it expects 2014 EBITDA to be "neutral to modestly higher" compared with 2014 levels. Jefferies notes this is 20% below consensus.
- Cowen (Outperform) still thinks a turnaround can happen. "We believe mgmt. is making the right decisions and that this should lead to outsized subs/EBITDA growth in coming quarters and consequent improvement in stock price."
- Low-end rival T-Mobile (TMUS -3.7%), which has been performing much better than Sprint in recent quarters, is also lower.
- Yesterday's earnings coverage
Tue, Nov. 4, 9:15 AM
Tue, Nov. 4, 4:35 AM
- Troubles at Sprint (NYSE:S) has forced SoftBank (OTCPK:SFTBY) to slash its operating profit forecast, which it now expects to be ¥900B ($7.9B) in the 12 months through March 2015, 10% down from the ¥1T profit it previously estimated.
- The warning came as SoftBank reported that its second-quarter operating profit fell 23%.
- Yesterday, Sprint slashed its full-year adjusted EBITDA guidance to $5.8B-$5.9B from $6.7B-$6.9B and announced that it was cutting another 2K jobs.
Mon, Nov. 3, 5:38 PM
Mon, Nov. 3, 5:13 PM
- Along with its FQ2 results, Sprint (NYSE:S) announces it's cutting another 2K jobs, and is "targeting $1.5 billion of annualized cost reductions compared to 2014 spending levels." The carrier announced a month ago it's launching a new "workforce reduction plan;" its headcount is around 36K.
- Sprint has also slashed its full-year capex guidance by ~$1B to less than $6B; it announced a cut of similar size three months ago. The company was previously (at SoftBank's urging) spending aggressively in an attempt to narrow Verizon/AT&T's 4G coverage leads.
- Though its FQ2 numbers are generally downbeat, Sprint asserts the price cuts and promos launched since Marcelo Claure took over as CEO are bearing fruit. Postpaid phone gross adds rose Y/Y in September, the first time they did so in 2014 - the iPhone 6 launch likely helped. Sprint also claims its postpaid phone net losses fell by 60% during the month.
- S -6.5% AH. FQ2 results, guidance/details
Mon, Nov. 3, 4:30 PM
- Not counting transactions, Sprint (NYSE:S) lost 272K postpaid subs in FQ2, lowering its total base to 29.5M. The loss is bigger than FQ1's 181K, and points to further share loss to T-Mobile, Verizon, and AT&T.
- 35K prepaid subs were added, a turnaround from FQ1's 542K decline. The base stands at 14.8M. Wholesale/affiliate net adds totaled 827K, better than FQ1's 530K and growing the base to 9.7M.
- Postpaid phone net losses totaled 500K, more than offsetting 261K (lower-ARPU) tablet net adds. Other device net losses amounted to 33K. Postpaid churn was 2.18%, up from 2.05% in Q2 and 1.99% a year ago. ARPU fell to $60.58 from $62.07 in Q2 and $64.24.
- Wireless service revenue fell 5% Y/Y to $6.76B. Equipment revenue rose 46% to $1.04B. With the help of cost cuts, adjusted EBITDA margin rose 180 bps to 18.6%, driving a 14% increase in wireless adjusted EBITDA to $1.37B.
- Wireline revenue fell 19% Y/Y to $708M. The segment had just $27M in adjusted EBITDA.
- Sprint (S) has slashed its full-year adjusted EBITDA guidance to $5.8B-$5.9B from $6.7B-$6.9B. The carrier cites both postpaid phone customer losses and (amid rising promotional activity) "increased selling costs." Net debt totaled $27B at quarter's end.
- The selloff Sprint has seen since its FQ1 report appears to be limiting Sprint's post-earnings decline.
- FQ2 results, PR
Mon, Nov. 3, 4:06 PM
Sun, Nov. 2, 5:30 PM
Fri, Oct. 24, 1:16 PM
- The FCC's Incentive Auction, which will auction off a giant chunk of low-frequency (600 MHz.) spectrum historically used for TV broadcasts, is now set for early 2016 instead of mid-2015.
- The agency cites legal challenges from broadcasters, as well as the auction's complexity and "the need for all auction participants to have certainty well in advance."
- A recent FCC study (.pdf) meant to appease broadcasters estimated the auction could raise $45B. Sprint (S -0.1%) and T-Mobile (TMUS +0.1%), whose rural and in-building coverage has suffered from a dearth of low-frequency spectrum, are expected to spend aggressively.
- AT&T (T +0.1%) and Verizon (VZ +1%) are also expected to bid heavily, though the FCC plans to limit their purchases on account of their already-massive low-frequency assets. AT&T has said it plans to spend at least $9B.
- Dish (DISH +1.4%), which has a large chunk of high-frequency spectrum it's still trying to find a use for, plans to participate as well.
Tue, Oct. 14, 4:00 PM
- A month after launching a $20/month iPhone 6 leasing plan to go with an iPhone-specific $50/month unlimited voice/text/data plan, Sprint (S +2.4%) has begun offering existing customers who take up an iPhone lease a $15/month "Loyalty Service Credit."
- The promo, available until Jan. 15, lasts as long as customers have an active lease and a qualifying service plan. It cuts the effective lease rates for the iPhone 6 and 6 Plus to $5/month and $10/month, respectively. After two years, users can trade in their iPhone for a new model, buy it, keep leasing it, or return the device and terminate service.
- New CEO Marcelo Claure has unveiled several new price plans and promos since taking charge, as his company tries to halt many quarters of share losses to Verizon, AT&T, and (more recently) T-Mobile. A data promo was launched a couple weeks ago.
- The iPhone 6 promo might also be aimed at taking a bite out of Sprint's heavy iPhone purchase obligations.
Fri, Oct. 3, 4:13 PM
- Making good on remarks from new CEO Marcelo Claure, Sprint (S) has begun a new "workforce reduction plan" set to be mostly completed by the end of October. A $160M FQ2 (Sep. quarter) charge is expected.
- Sprint adds "additional material charges associated with future labor reductions may occur in future periods." The carrier has been steadily losing postpaid and prepaid share in recent quarters.
- Back in March, Sprint announced it was shutting down 55 stores and 150 service/repair centers.
Thu, Oct. 2, 2:42 AM
- The FCC is prepping its upcoming auction of frequencies known as AWS-3, scheduled to begin on Nov. 13. The auction is expected to raise at least $10B and will include airwaves previously occupied by multiple federal users.
- A total of 80 entities submitted initial applications, including Dish Network (NASDAQ:DISH) and three of the four largest U.S. wireless carriers - Verizon (NYSE:VZ), AT&T (NYSE:T) and T-Mobile (NYSE:TMUS).
- Sprint (NYSE:S) is planning sit out on the auction to save firepower for a major sale of low-frequency airwaves scheduled for next year.
Fri, Sep. 12, 10:14 AM
- Apple's (AAPL +0.1%) iPhone 6 Plus is now on backorder and not available to ship for 3-4 weeks in the U.S., judging by Apple.com shipment quotes after the device went on sale after midnight.
- The iPhone 6 Plus, the larger of the two iPhone 6 models offered, is showing a shipment time of 3-4 weeks rather than delivery on the first day of sale, Sept. 19th, for the iPhone 6.
- Also, BGR reports that iPhone 6 Plus units through AT&T (T -0.4%) will now ship in 21-28 business days, Verizon's (VZ -0.6%) models are backordered until Oct. 7 (for 64 GB) or Oct. 14 (16 GB and 128 GB), and Sprint (S +7.3%) says all of its shipments are currently delayed.
- Worldwide demand also is said to be high for the Plus, with customers in France and the U.K. saying the larger iPhone has sold out.
- AAPL is expected to announce next weekend the total initial sales results for the first three days of availability.
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