They have something to celebrate out in Overland Park, Kansas after a long drought. Sprint’s first quarter earnings came in stronger than expected, and the company’s stock price has surged 20% in response.
Revenue of $8.11B actually came in lighter than expected, but Sprint only lost $0.21 per share during the quarter, six cents better than expected. That wouldn’t be enough to make the stock jump so much, but they also upgraded fiscal 2015 EBITDA projections from $6.8-7.1B all the way up to $7.7-8.0B. That’s a big jump given there’s just one more quarter left. They see fiscal 2016 EBITDA as being up 24% from there to $9.5-10B.
Sprint added almost 500K net customers during the quarter, powered by the aggressive pricing it had put into place. They have reduced headcount by 2,500 people since the fall as part of a major cost cutting program, news of which had spooked the market a bit earlier in the week.
In the wireline business, which few bother to look at anymore, the situation didn’t change much. Revenues were $581M, dropping another $18M sequentialy, while adjusted EBITDA ticked upward slightly from $29M to $33M with margins rising above the 5% mark again.
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Categories: Financials · Internet Backbones · Wireless
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The only “celebration” and “fun” that there possibly could be is in the C-suite. Rob, you’re making too much of a perfectly ordinary 1-day bounceback in a stock which had dramatically sold off once again and somewhat corrected up on an earnings day, in no way recovering its previous losses. The movement simply reflects the equity holders’ position relative to more senior bondholders that there is some liquidity to hold off the dogs given $5 billion in looming debt maturities over the next less than two years. The less-than-expected revenue is not meaningless in the marketplace – do people realize that Sprint revenues are down almost 10% year over year? Sprint got its results largely by reducing churn among existing customers, but Claure has this annoying habit (not unusual but not universal among new CEOs) of comparing Sprint today vs. Sprint yesterday, which is irrelevant to customers in procurement situations, who only care about Sprint today vs. Verizon, AT&T and T-Mobile today. A company that is constantly laying off more people, that can’t afford to participate in the next spectrum auction, and that is being very squirrelly about disclosing how its densification project is really working lacks the dynamism to compete well on its own. The wireline is simply in runoff.
^—This