Sprint Nextel swings to 2Q loss

KANSAS CITY, Mo. - Sprint Nextel Corp., the nation's third-largest wireless carrier, said today that it swung to a second-quarter loss on severance and other charges but still beat Wall Street expectations and said it had slowed customer defections.

The company, however, said it expected those losses to increase again in the third quarter, even as cash flows are expected to improve in the second half of the year.

The Overland Park, Kan.-based company reported that it lost $344 million, or 12 cents per share, during the quarter ending June 30. By comparison, the company earned $19 million, or 1 cent per share, during the same period a year ago.

Not counting onetime items, Sprint Nextel said it would have earned 6 cents per share, beating the 3 cents per share expected, on average, by analysts surveyed by Thomson Financial.

The onetime items included $149 million in pretax charges for severance, exit costs and asset impairments and other minor costs tied to its 2005 purchase of Nextel Communications Inc.

"We are seeing signs of progress from our efforts to improve the customer experience, rebuild the Sprint brand and increase our profitability," chief executive officer Dan Hesse said in a statement.

Revenue during the quarter fell about 11 percent to $9.06 billion, falling below the $9.17 billion expected by analysts.

Sprint Nextel's wireless business reported a 12.5 percent decline in revenue to $7.7 billion as it lost a net of 901,000 subscribers, including 776,000 valuable postpaid customers who pay monthly bills. That was an improvement from the first quarter, when the company lost 1.1 million subscribers.

Postpaid churn, or the measure of customers starting and stopping service, improved to slightly less than 2 percent - down from 2.45 percent in the previous quarter - and about level with where it was a year ago.

Still, the company said it expected postpaid losses to increase in the third quarter because of seasonal pressure. But, it expects those losses to moderate and that free cash flow will improve throughout the second half of the year.

Sprint Nextel also said today that it plans to sell up to three million shares of preferred stock to U.S. institutional buyers to raise an estimated $3 billion. The company said the shares could be converted into common stock and that the money could be used to reduce debt.