|
Sprint to miss 3Q estimate
|
 |
September 20, 2000: 10:44 a.m. ET
Wireless tracking stock plunges as subscriber growth goal is lowered
|
NEW YORK (CNNfn) - Sprint Corp. warned Wednesday it will miss third-quarter earnings forecasts and said it will not see the growth in its wireless customer base that it projected earlier, pushing down the stock about 5 percent.
The Kansas City, Mo., company said it now expects to earn in the range of 45 to 47 cents a share for the quarter, excluding special items. Its previous guidance had called for earnings in the high 40s, while analysts surveyed by earnings tracker First Call had forecast the telecommunications company to earn 49 cents a share, up from 41 cents a share in the year-earlier quarter.
 The bigger news for investors, though, was the company's statement that net growth in wireless subscribers is expected to be about 800,000, or 100,000 below the company's earlier guidance.
Wireless stocks are valued at least partly by customer base and growth rate rather than financial performance, and news of the declining subscriber estimates drove the company's wireless tracking stock, Sprint PCS, sharply lower.
Shares of Sprint (FON: Research, Estimates) tumbled to their lowest level in more than two years, falling to $26.12 before closing at $26.81, down $1.44, or about 5 percent.
Shares of its Sprint PCS (PCS: Research, Estimates) subsidiary closed off $7.31, or about 18 percent, to $33.50, after touching a session low of $32.44, its lowest level in the past year.
Despite lowering the projection for wireless subscribers, the company said earnings before interest, taxes, depreciation and amortization (EBITDA) will be in the "low $100 million range."
Sprint spokesman Mark Bonavia said previous analysts' estimates of wireless EBITDA were in the $60 million to $70 million range. First Call forecasts the unit will have a net loss of 44 cents a share, an improvement from the 66 cents a share net loss a year earlier.
The company attributed the lower wireless subscriber growth projection to greater competition along with a rise in company-initiated deactivations.
Bonavia said the company is cutting off less-profitable wireless customers to focus on its more-profitable client base.
"We're looking for clients who will stick around for the long haul, who are using wireless Internet connections," he said. "These [disconnections] are essentially prepaid, bad debt or fraud related accounts."
 Bonavia said the change in wireless projection is not responsible for the new guidance on earnings per share at the parent company. The company's statement said lower earnings are due partly to more-competitive pricing in long-distance and local phone services as well as seasonally high maintenance costs.
The company said its overall earnings for the year from its core operations, excluding investments in other operations, should still have a percentage rate increase in the mid-teens from last year's $2.31 per share, on the same basis. The analysts' estimates include those investments and are not comparable to the company's guidance. 
|
|
|
|
|
|
Sprint
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
