S – Sprint Stock Ricochets on Earnings

by Robert Martin | October 30, 2013 11:40 am

Sprint stockSprint (S[1]) reported another disappointing quarter this morning before the bell, and since then Sprint stock has been churning up and down as investors absorb the news.

Although the company has tried to join the ranks of industry leaders Verizon (VZ[2]) and AT&T (T[3]) with its “One Up” plan[4] that makes it easy for users to upgrade phones yearly, Sprint stock is entering its fourth unprofitable quarter.

This is also the first quarter Sprint reported since it was taken over by SoftBank.

Sprint stock is also still feeling the effects of shutting down the Nextel wireless network[5] this summer, which lost the company 360,000 monthly subscribers.

Customer churn is a problem for Sprint, with a net loss of 313,000 customers in last quarter. That’s less than in the year-ago quarter, though, so things may be looking up.

The One Up plan is just one of the company’s unlimited text, talk and data plans intended to acquire and keep customers. Sprint offers the cheapest all-inclusive plan among the top three carriers.

Sprint also attracted over half a million new subscribers from its Apple (AAPL[6]) iPhone sales, which contributed to Sprint stock reporting the best-ever average revenue per user at $68.28.

Revenue for S was also in-line with analyst expectations at $8.69 billion, and wireless revenue grew for the thirteenth quarter in a row.

Looking forward for Sprint stock, smartphones will be the long-term driver of subscriber growth. Though Sprint’s monthly smartphone plans are cheaper than its competitors, naturally Sprint’s smartphone plans are more expensive than their feature phone plans without data or text.

As a result, it’s a bullish sign for Sprint stock that among monthly plan subscribers, 92% have one of the (comparatively) more-expensive smartphone plans.

Last year’s acquisition of Clearwire also increased the amount of spectrum Sprint had access to, which is a step forward to improving their 3G and 4G service, though it still struggles to compete with big dogs VZ and T on wireless speed[7].

Yesterday Deutsche Bank reiterated[8] a “buy” rating for Sprint stock with a price target of $8.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.

Endnotes:

  1. S: http://studio-5.financialcontent.com/investplace/quote?Symbol=S
  2. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  3. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  4. “One Up” plan: https://investorplace.com/2013/09/sprints-one-up-upgrade-program-is-a-go/
  5. shutting down the Nextel wireless network: http://www.techhive.com/article/2045541/sprint-reports-16b-net-loss-as-it-shuts-down-nextel-platform.html
  6. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  7. on wireless speed: http://lifehacker.com/5939237/whats-the-best-wireless-carrier
  8. Deutsche Bank reiterated: http://tickerreport.com/banking-finance/45335/sprint-corp-stock-rating-reaffirmed-by-deutsche-bank-s/

Source URL: https://investorplace.com/2013/10/sprint-stock-earnings-q3/

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