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Sprint Nextel Corp. Series 1 Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 7, 2012 10:06AM

Sprint Nextel Corp. Series 1 (S) filed Quarterly Report for the period ended 2012-09-30. Sprint Nextel Corp has a market cap of $16.49 billion; its shares were traded at around $5.66 with and P/S ratio of 0.5.



Highlight of Business Operations:

Equipment revenue increased $134 million, or 22%, and $237 million, or 12%, for the three and nine-month periods ended September 30, 2012 as compared to the same periods in 2011 and cost of products increased $615 million, or 35%, and $1.5 billion, or 27%, for the three and nine-month periods ended September 30, 2012 as compared to the same periods in 2011. The increase in both equipment revenue and cost of products is primarily due to a higher average sales price and cost per device sold for postpaid and prepaid devices, particularly driven by the introduction of the more expensive iPhone to postpaid and prepaid subscribers, partially offset by a decline in the number of postpaid and prepaid devices sold. As a result of a growing number of postpaid and prepaid subscribers

Voice revenues decreased $75 million, or 16%, and $198 million, or 14%, for the three and nine-month periods ended September 30, 2012 as compared to the same periods in 2011 primarily driven by overall price declines of which $43 million and $135 million were related to the decline in prices for the sale of services to our Wireless segment in the three and nine-month periods ended September 30, 2012, respectively, as well as volume declines due to customer churn. Voice revenues generated from the sale of services to our Wireless segment represented 33% and 31% of total voice revenues for the three and nine-month periods ended September 30, 2012 as compared to 35% and 33% for the three and nine-month periods ended September 30, 2011.

23%, and $55 million, or 15%, for the three and nine-month periods ended September 30, 2012 as compared to the same periods in 2011 as a result of customer churn driven by the focus to no longer provide frame relay and ATM services. Data revenues generated from the provision of services to the Wireless segment represented 47% and 44% of total data revenue for the three and nine-month periods ended September 30, 2012 as compared to 33% and 34% for the three and nine-month periods ended September 30, 2011.

Internet revenues reflect sales of IP-based data services, including MPLS, VoIP, SIP, and managed services bundled with IP-based data access. Internet revenues decreased $19 million, or 4%, and $89 million, or 6%, for the three and nine-month periods ended September 30, 2012 as compared to the same periods in 2011. Certain cable MSO's have decided to in-source their digital voice products resulting in an $11 million and $84 million decrease in the three and nine-month periods ended September 30, 2012 as compared to the same periods in 2011. In addition, Internet revenue decreased due to fewer IP customers, partially offset by revenues generated from the sale of services to our Wireless segment, which increased as a result of an increase in the requirements to support wireless customers' data traffic related to increased smartphone usage. Sale of services to our Wireless segment represented 11% of total Internet revenues in both the three and nine-month periods ended September 30, 2012 as compared to 9% and 7% for the three and nine-month periods ended September 30, 2011, respectively.

Costs of services and products include access costs paid to local phone companies, other domestic service providers and foreign phone companies to complete calls made by our domestic subscribers, costs to operate and maintain our networks, and costs of equipment. Costs of services and products decreased $84 million, or 11%, and $144 million, or 6% in the three and nine-month periods ended September 30, 2012, respectively, as compared to the same periods in 2011 primarily due to lower access expense as a result of savings initiatives and declining voice, data and Internet volumes, partially offset by access exit costs incurred related to payments that will continue to be made under our backhaul access contracts for which we will no longer be receiving any economic benefit. Service gross margin percentage was flat at 29% in both of the three-month periods ended September 30, 2011 and 2012 and decreased from 31% in the nine-month period ended September 30, 2011 to 28% in the nine-month period ended September 30, 2012, primarily as a result of a decrease in net service revenue partially offset by a decrease in cost of services and products.

Read the The complete Report



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