The business stories that matter, by Fortune's Colin Barr
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May 12, 2008, 7:24 am

Sprint subscribers still fleeing

Sprint (S) posted another loss as wireless subscribers continue to flee. Sprint lost $505 million, or 18 cents a share, for the first quarter ended March 31, compared with a year-ago loss of $211 million, or 7 cents a share. Revenue dropped 8% from a year ago to $9.33 billion. Sprint’s adjusted profit, which removes the effects of special items such as job-cut costs and merger-related amortization expense, slid to 4 cents a share from 18 cents a year ago.

“As expected, our Wireless business delivered weak financial results,” CEO Dan Hesse said. “While the business will continue to face challenges in the short term, we are making progress in methodically attacking the sources of our performance issues.”

Sprint said it lost 1.09 million wireless users in the latest quarter, which is a bit better than the company’s forecast for a loss of 1.2 million users. Still, wireless revenue dropped 9% from a year ago and 6% from fourth-quarter levels, while average revenue per user dropped as a result of “customer migrations to lower-priced plans, a higher-than-average [average revenue per user, or ARPU] in deactivating subscribers, and increased customer concessions to improve retention,” Sprint said.

Sprint said it has completed its latest round of job cuts, but suggests there could be more to come later this year. “In light of the trend of our declining earnings before interest, taxes, depreciation and amortization, we are continuing to implement cost reduction initiatives, are exploring de-levering, disposition of non-core assets and other measures” to stay in compliance with lenders’ terms, Sprint said. The company says it continues to assess its business model and financial outlook and will update investors in August.

hey Deb from Charlotte…
Verizon Wireless is your answer in Charlotte. I have great coverage for my business, superior customer service and a team of professionals at the Circuit City in Concord Mills that I might say is the best in any “utility” company that I’ve ever worked with. They treat you as a valued customer all the time and they take care of you throughout your contract. A number of my associates with Nextel have switched over there and been 100% satisfied. Ask for their manager and mention I sent you, they work very well with small businesses

Posted By Crystal, Mooresville, NC : May 13, 2008 7:47 am

As a business Nextel subscriber for many years, I noticed a decline in performance about the same time that Sprint took on Nextel. Unfortunately, for Sprint, they took the brunt of what wasn’t really their issue (except by virtue of purchase), which was the “Boost” product on the Nextel-side. This pay-as-you-go phone/mobile-to-mobile used the Nextel signal and created a nightmare of connectivity issues for Nextel subscribers vying for the same frequency and the same towers. Nextel essentially threw their bread and butter commercial clients under the bus for this product.
Sprint did little in the Sprint-Nextel transition to ease this mess and long-term, committed business customers were left to fend for themselves with customer service who didn’t speak English, increasingly faltering connectivity problems, no effort to reward/retain the commercial Nextel user, and less-than-transparent contract renewal. All of this was put on the Sprint brand.
I’ve seen a marked improvement in most areas EXCEPT connectivity over the past year. And without that, what’s the point? Sprint’s effort to create hybrid phones to utilize incompatible signals was, in my opinion, a dismal failure.
Anyway, without some immediate relief in equipment pricing and improved connectivity, it may be a little too little too late. This is one business user (with 18 units), who is counting the days until contract expiration, when we, too, will likely flee.

Posted By Deb, Charlotte NC : May 12, 2008 12:50 pm

Worked for this company on contract. My boss and co-workers were based out of state. It was a failed attempt at outsourcing. This company only served to trash my resume. Either they change or its Good riddance.

Posted By Tim, Houston TX : May 12, 2008 11:24 am

No one wanted to be, tried to be, a more loyal Sprint subscriber than I did. After a second wireless card for my laptop went kaput just 9 months after I purchased it, and customer service was as blase about the situation as could be (yes, they can go at any minute, I was told), I gave up. Have been with Verizon for almost 6 month with no problem whatsoever. Sprint is utterly mismanaged, and keeps saying it is “making progress”. No, it is not. It has just gotten worse and worse.

Posted By Dan, Dallas, Texas : May 12, 2008 11:18 am

Sprint’s failure can also be attributed to its willfull stubborness.

When the Razor came out, every carrier under the sun offered it. Sprint said no and dug its feet in. Instead, it offered the Katana, a totally crappy mirror-product.

Finally, after losing millions of customers, Sprint caved, and offered the “Red” Aids Razor. But while it’s nice to give to charity, it was obviously a ploy. The party started at 8pm sharp. Sprint thought if it showed up at 10pm only with a nice little gift, everything would be ok, but the damage was already done. The only “red” that was present was the profit margin as Sprint bled customers.

This trend of willfull stubborness continues today with the Ifone. Instead of offering its customers the popular and successful phones people want, Sprint comes up with half-assed knock-offs and mirror-products of “their” brands.

This unwillingness to adapt and change of a company in the tech-sector, the fastest changing market in the world, is nothing less than the epitome of ignorance.

If the board at Sprint had even 2 brain cells, they would realize this and start offering every phone under the sun. Obviously customers want good service, but when it comes to selection in the cell phone market, telling customers “you can’t get that with us” is the stupidest thing you can do. The customer will simply go to the other carriers to get what they want, and you wil continue to lose millions of subcribers like Sprint is now.

Sprint obviously doesn’t realize the importance of selection. You use your cell a million times a day and so it’s vital to have the phone YOU want to use, not what your carrier makes you settle for. Considering minute plans are so similar these days, phone selection is the most important difference among carriers and Sprint’s selection is the worst in the biz.

Luckily, I like the Moto Q and at least Sprint offers me that as a customer.

Posted By Addam Fazio, Columbus OH : May 12, 2008 11:10 am

I had a very bad customer service experience with Sprint back in 2003. I swore at that time they would never get my business again even if their service was free. I am glad that they are suffering and hope they go out business.

Posted By Reese, Mount Pleasant, SC : May 12, 2008 10:53 am

Sprint is a horrible wireless carrier. They are greedy, sneaky gougers and deserve the losses they are suffering today.

Posted By Mike, Chico, California : May 12, 2008 10:44 am

As a long time SPRINT customer I had always been pleased with their service until I added two additional phone lines. After that, my bill had never been correctly billed to me. After several months of bickering I sent a letter to Dan Hesse, CEO, explaining all my trauma in trying to correct my bill stating, “My bill is not rocket science!” I asked for them to either correct my billing statements or to let me out of my contracts AT NO COST TO ME because this was no fault of mine. Amazingly my bill was fixed. Thank goodness. I must tell you, when my contract expires, I’m “jumping ship”.

Posted By Canedo Family, San Antonio, TX : May 12, 2008 10:34 am

This is all because of their terrible customer service in stores and on the phone. Also their terrible phone service and faulty phone OS. They deserve it. I am the next customer to leave this sinking ship.

Posted By M Azeem, Brooklyn, NY : May 12, 2008 10:32 am

I worked for Sprint for 7 years. I can only imagine the agony subscribers feel. The internal resources that were in place during the time that I worked there was a joke. The employees aren’t treated any better than the customers.

Posted By Hotline me in B’ham, AL : May 12, 2008 10:18 am

Last fall I had a very bad experience with a Sprint reseller that will cause me to leave Sprint when my contract is up in October 2009. The store looked just like a Sprint store and the guys lied to me about the accessories they were going to give me for buying two phones and contracts for two years. I was and still am angry enough at the reseller that Sprint will be the loser.

Posted By Jeff, Schertz, TX : May 12, 2008 10:16 am

Good riddance. I have been burned by this company and am happy they are failing. Business practices like theirs should not be tolerated.

Posted By Toan, Houston, Texas : May 12, 2008 9:28 am

I am pleased. After multiple attempts to work out a dispute with Sprint, and being insulted and repetitively put off by an incredibly arrogant customer service organization, I dropped Sprint in favor of another provider, in the middle of a contract. I have since convinced many people to drop Sprint in favor of ANY other provider. Sprint fails to realize we can still vote with our feet.

Posted By Dave, Seattle, Wa : May 12, 2008 9:00 am

Whats going on with Sprint? I have had virtually all carriers in my life and I have found nothing but exceptional coverage, decent prices, and decent customer service with Sprint. Why are they losing customers? Seems they have poor marketing. They let the other carriers pin them with bad service labels without fighting back. Take a clue from Hilary and Trump. When someone hits you, hit them back twice as hard.

Posted By Rich, Bear Delaware : May 12, 2008 8:54 am

Spring loosing wireless customers is due to unethical business practices indulged in by the wireless division for many years - automatically renewing contracts without authorization, forcing customers then to pay $200 per phone to get out of these automatic renewals and so forth. No doubt it set the scene for many years of customer losses. Currently XM radio is using the same very nasty unethical business practices to show short term results, but will bleed for many years as customers cancel their service. Some tactics being used by XM is to hang calls when anyone asks for service cancellation, automatically renewing contracts, even when customer has asked for cancelling service and then have collection agencies make calls for money “owed”. This is all because some CEO or leadership team wants to collect some share price target bonuses and they don’t care what happens a few years down the line, because these people have moved on to other companies.

In the case of Sprint, the wireless division is in a death spiral. No CEO can salvage the situation. Verizon and T-Mobile will continue to eat up market share. Sooner Sprint is bought out the better it will be for shareholders.

Posted By Ben, Minneapolis, MN : May 12, 2008 8:53 am

With very few brains left from the Nextel side, Sprint needs to consider outsourcing Nextel/iDEN business (there are some very attractive options exist) and focus on core CDMA business, revive failed cable relationship and focus on seamless quadraple play.

Posted By Sprintx, Herndon, VA : May 12, 2008 8:25 am
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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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