Sprint’s $29.5b Quarterly Loss Threatens Its Xohm WiMAX
29 February 2008Sprint Nextel’s fourth quarter 2007 loss of $29.5 billion is not going to help the company’s Xohm branded WiMAX efforts.
However, a quick examination of the quarterly results shows that WiMAX may be Sprint’s best hope for the future.
The question is whether it might be forced to spin off Xohm or bring in outside investors in order to have the funds to launch Xohm.
How can management think about the massive effort involved in launching an unproven wireless network when it’s lost over half a million subscribers in the prior three months and expects to lose over one million in the next three months?
Sprint, the third largest US cellco, is losing subscribers at a dizzying rate and said it expects to lose another 1.2 million in the first quarter, with losses continuing into the second quarter. It lost 683,000 in the fourth quarter.
Sprint has 53.8 million subscribers.
New CEO Dan Hesse was blunt in assessing the company’s situation, “I now have had two full months at the helm, and to be perfectly frank, the issues we face are more difficult than what I had expected to find.”
Hesse said the turnaround in the company’s situation “will not happen for many quarters.” He has already disclosed plans to cut the number of employees by 7% and consolidate operations in its Overland Park, Kansas headquarters.
Sprint joined the wireless price war this week by announcing an unlimited calling plan for $99.99 a month. It includes text messaging and push-to-talk. Existing customers can switch to the new plan without extending their current contract. New activations require a two-year agreement.
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