Business Anywhere Blog

Mobilizing the Business and Business of Mobile

How long will Sprint survive?

with 2 comments

Sprint today reported its Q3 numbers and they were horrendous. It lost 1.3 customers during the quarter which reduced its revenue from $10.04 billion a year ago to $8.81 billion this quarter. This resulted in a quarterly loss of $342 million or 11 cents a share.

Sprint has been losing customers, almost a million every quarter for the last 3 quarters. At this rate, it is going to run out of money soon. Then the question arises as to what happens to it. It has tried selling its iDEN (legacy) network which has gone no where due to lack of buyer interest. Its investments in WiMAX has a while to go before they can pay off.

Sprint did take steps to reduce bankruptcy concerns for now by paying down some of its credit facility and increasing interest that it will pay on its new debt. However, that just buys its some breathing space for now. Falling ARPU down to $56 and shrinking customer base does not bode well for Sprint. With its burn rate of $7.8 billion a quarter and $4.1 billion in cash balance at the end of the quarter, it will end up using all of its $1 billion free cash flow in coming months. I think it is a matter of time and another shoe to fall before Sprint becomes an acquisition target or fails.

[Via New York Times]


Written by dvdand

November 7, 2008 at 1:47 pm

Posted in Financials, Sprint

Tagged with ,

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