Thing get worse and worse at Sprint Nextel (NYSE:S). The company Friday morning announced some extremely nasty fourth quarter subscriber numbers, while also unveiling plans to cut 4,000 jobs and to close 125 of its 1,400 company owned retail stores.
In the fourth quarter, the company reported net losses of 683,000 post-paid subscribers, and 202,000 pre-paid users. Those offset gains of 500,000 subs from wholesalers, 256,000 Boost Unlimited users and 20,000 subs from affiliate partners. Craig Moffett, an analyst with Bernstein Research writes that the numbers were “disastrously weak.” he says the 683K lost post-paid subs is “a new low for Sprint,” which has been losing subscribers since the 2006 third quarter. And he notes that the fourth quarter is generally the strongest quarter of the year for the wireless industry due to the holiday season.
Earlier Friday morning, Moffett had cut his price targets for Sprint, Verizon (NYSE:VZ) and AT&T (NYSE:T), all of which he rates Market Perform. His targets go to $14 from $18 on Sprint, $41 from $44 for Verizon, and $44 from $47 for AT&T. His issue: the stocks look vulnerable to an economic downturn. He says the stocks are not the defensive issues they once were.
The issue, he says, is their ability to continue to growth the wireless business. “With penetration at 80%, the economics of newcomers to the wireless industry in 2008 are already challenging - recession or not,” he writes. “And history suggests that the wireless industry is susceptible to a significant growth shock.”