Sprint Nextel Cuts Workforce

Elena
09 Jan, 2007
New York City

In a financial update released after the close on Monday, Sprint Nextel said that its cell phone business suffered a net loss of 300,000 monthly subscribers in Q4 and that the company will reduce workforce by 5,000 jobs to just below 60,000 positions. Most of the job cuts are expected in Q1 of the new fiscal year.

[R]8:00AM Sprint Nextel dropped 11.4% in pre-open amid considerable subscribers loss and plans of workforce reduction.[/R]
Sprint Nextel Corp. ((S)) dropped 8% late Monday after reporting that its cell phone business suffered a net loss of 300,000 monthly subscribers in Q4 and that the company will reduce workforce by 5,000 jobs to just below 60,000 positions. Most of the job cuts are expected in Q1 of the new fiscal year.

During Q4, Sprint added 742,000 net subscribers, ending the year with a customer base of 53.1 million. The fourth quarter net additions included 876,000 from both wholesalers and affiliate companies that sell Sprint Nextel services, as well as 171,000 new customers for Boost. However, 306,000 direct subscribers left the company, driven by a continuing exodus of Nextel subscribers because of worsening service quality. Although the Sprint brand subscriber base grew during the quarter, it failed to offset the Nextel drop.

Sprint said it expects its 2006 results to be in line with its previous guidance, with full-year revenue of $41 billion to $41.5 billion and adjusted operating income before depreciation and amortization of $12.6 billion to $12.9 billion. On average, analysts forecast 2006 earnings of $1.26 per share on sales of $41.53 billion.

The update, which came after the close of Monday''s regular stock session, also included a 2007 outlook which came in below many Wall Street forecasts. For 2007, the company projects operating revenue of $41 billion to $42 billion, while analysts expect earnings of $1.32 per share on sales of $42.04 billion.


[R]7:30 AM Asian markets finish mostly higher with China surging on China Life.[/R]
Asian markets finished higher on Tuesday. The Nikkei Index in Japan ended 0.9% higher at 17,238. Mitsui Sumitomo Insurance advanced 5.4%, Millea Holdings rose 3.4% and Sompo Japan Insurance gained 3.1%. Shinsei Bank jumped 3.6% and Mizuho Financial Group closed 2.3% higher. Steelmakers rebounded after their heavy losses on Friday. JFE Holdings advanced 4.9% and Nippon Steel rose 3.3%. Sony surged 6.5%, after Goldman Sachs raised its rating on the company to buy.

In China, the Shanghai Composite Index soared 3.7% to 2,808. Expectations of improved earnings supported shares to a record closing high following several large-cap companies forecast strong growth in 2006 net profit, while Class A shares of China Life made a stronger-than-expected debut. China Life closed at 38.93 yuan ($4.98), more than double its initial public offering price.

The Hong Kong Hang Seng Index shed 0.7% to 19,898 bucking the overall trend. Ping An Insurance declined 4.3%, while PICC fell 6.6%. China Construction Bank slumped 3.5%, Bank of China dipped 2.4% and ICBC declined 2.1%. In Australia, the S&P/ASX 200 index surged 1.6% to end at 5,590. The stock market finished higher on a broad-based recovery led by resource stocks as BHP Billiton gained 3.5%, Zinifex ended 4.5% higher and Minara rose 4% despite declines in zinc and nickel prices on the London Metal Exchange.

The Kospi Index in South Korea gained 0.3% to 1,374. The stock market ended slightly higher as investors hunted for bargains in banking and construction stocks. Kookmin Bank, the largest Korean commercial bank by assets, gained 1.4%, and Hana Financial Group advanced 2.4%. Hyundai Engineering & Construction surged 4% and GS Engineering & Construction gained 4%.


[R]6:30 AM European markets advance on construction and leisure sectors.[/R]
European markets were higher on Tuesday. By mid-morning, the U.K. FTSE 100 index rose 17.2 points, or 0.3% to 6,210.60, while the German Xetra Dax gained 43.2 points, or 0.7%, to 6,651.49 and the French CAC 40 added 37.5 points, or 0.7%, at 5,566.10.

Advancers

Saint Gobain led the advancers with a gain of 5%. On Tuesday, ABN Amro upgraded its recommendation from hold to buy. Aegon rose 4%, helped by an upgrade from neutral to buy by Merrill Lynch.

Holcim was in demand for a second session in succession, gaining 2.3% following an upbeat assessment from the chief executive of the Swiss concrete maker. EADS added 1.3% on news of an order for 50 A320 aircraft from Air Asia which arrived as the market closed on Monday.

Travel stocks advanced in Europe as oil prices sank, with airline Deutsche Lufthansa rising 1.2% and Air France-KLM gaining 0.4% after posting a 3.3% rise in passengers carried in December.

Decliners

Shares in large-cap BP declined 1.7% after it said that it expects disappointing fourth-quarter results. U.K. retailer Marks & Spencer was another decliner, down 1.9% after strong recent gains. Merrill Lynch also downgraded German insurer Allianz to neutral from buy. Allianz shares lost 0.3%

Beiersdorf fell 1.6% on profit taking after the maker of Nivea skin cream reported a 7% increase in full-year sales in 2006.

Oil and gold

Crude oil declined for a second day in New York, falling below $56 a barrel, as mild weather in the U.S. cut heating fuel demand and increased stockpiles. Crude oil for February delivery fell 58 cents, or 1%, to $55.51 in after-hours electronic trading on the New York Mercantile Exchange. In London, Brent crude for February settlement declined 53 cents, or 1%, to $55.07 a barrel.

Gold rose for a second day in London on slowing sales by investment funds and increased demand from jewelers. Gold for immediate delivery rose $2.90, or 0.5%, to $612.90 an ounce in early trade in London.

Currencies

The euro retreated against the dollar. The euro was at $1.3030, from $1.3024. The yen fell to 119.17 against the dollar in early trade in London, from 118.78 late in New York yesterday. It traded at 155.28 per euro, from 154.71, after reaching a record 158.06 on Jan. 3. Against the euro, the pound was at 67.09 pence in London from 67.22 pence on Jan. 8. It also traded at $1.9418 versus the dollar, from $1.9378.