Thursday, February 28, 2008

Sprint loss $29.7 bil in Q4

-- Sprint Nextel Corp., the third-biggest U.S. wireless carrier, posted a $29.5 billion loss andscrapped its dividend after writing down most of the NextelCommunications Inc. acquisition from two years ago. --reasons: wireless: due to lower service revenues and higher SG+A expenses. --Sprint sank as much as 13 percent in New York trading andits credit-default swaps reached a record. The company reported afourth-quarter net loss of $10.36 a share. Sales fell 5.7 percentto $9.85 billion, missing analysts' estimates, and the carrierborrowed $2.5 billion under a credit line. --The writedown put Nextel's value at 80 percent less thanwhen it was acquired and the loss is the fifth-largest amongStandard & Poor's 500 Index companies since 1990. Sprint expects1.2 million subscribers to leave this quarter, as many as it lostin all of 2007. Chief Executive Officer Dan Hesse, who took overin December, said business is deteriorating. -- To win back customers, Hesse today announced an unlimited calling plan for $89.99 a month, including text-messaging andwalkie-talkie calling in addition to regular phone calls. Thatescalates a price war that started last week, when bigger rivalsAT&T Inc. and Verizon Wireless unveiled $99.99 offerings. Sprintwill sell a $99.99 version with Web access, television and music. -- Big mergers often haven't provided the gains companies wereseeking, and telecommunications and media purchases have providedsome of the most stark examples. -- The $124 billion combination of Time Warner Inc. and AmericaOnline Inc. in 2001 caused $100 billion in writedowns. DeutscheTelekom AG, Europe's biggest phone company, took 21.4 billioneuros ($32.5 billion) of writedowns in 2002 to cut the value ofmobile-phone assets. Vivendi SA wrote down the value of mobile-phone assets. Vivendi SA wrote down the value ofentertainment, TV and music units by 18.4 billion euros for 2002. -- Sprint's $2 billion of 8.75 percent bonds due in 2032 fellabout 12 cents to 82 cents on the dollar, according to Trace, thebond-price reporting system of the Financial Industry RegulatoryAuthority. The debt yields 10.9 percent, or 632 basis points more -- Credit-default swaps tied to Sprint's bonds soared to thehighest on record, a signal that debt-market investors aregrowing concerned about the company's ability to repay its debt.The contracts climbed 206 basis points to 580 basis points,according to London-based CMA Datavision. --The company said that the charge would not affect future cash flows and did not cause it to break any of its debt covenants. --expect: layoff

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