Feature Article

April 25, 2012

Sprint Beats First Quarter Expectations

Sprint surpassed Wall Street analysts’ expectations this quarter and is steadily moving ahead. When Wall Street predicted that Sprint would lose $0.42 per share from $8.71 billion in revenue, they were wrong. Instead, Sprint only lost $.29 from $8.73 billion. And Sprint didn’t just supersede quarterly expectations, they blew analysts away with what was expected of subscribers.

Wall Street guessed that Sprint would lose 22,000-125,00 subscribers. Sprint actually gained 263,000. There are three reasons that could explain how Sprint has come back from their string of bad days at the market: The iPhone, contract-based subscriptions and prepaid customers.

The Associated Press credits the iPhone as Sprint’s lifesaver. After a terrible string of market disappointments, Sprint made a huge leap of faith by signing onto a $15.5 billion, 4-year contract with Apple in October in order to compete with AT&T and Verizon, two companies that already carried the phones. The move paid off, and in return, Sprint began locking its customers into contracts as well. Incorporated into these plans are enticing incentives such as “unlimited data plans.”

And although Sprint has been criticized for slow data network, the company is already planning on changing this by next quarter. Although contract-based subscriptions are lucrative, many might be surprised to learn that Sprint doesn't generate the majority of its revenue from these customers. Quite the opposite, in fact. Sprint reaps most of its profits from prepaid customers.

One way Sprint is going to offer faster network service is by bringing WiMax to Virgin and Boost. Prepaid customers have proven to be a significant contribution to Sprint’s success, and CNet reports that 489,000 customers that signed on before this past quarter were prepaid customers. Although WiMax is pretty much the standard 4G network from the past, Sprint is moving to offer 4G LTE networks to six different markets before next quarter.

Edited by Jennifer Russell

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