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Sprint Nextel bleeds US$29.5 billion, cuts dividend

Sprint Nextel bleeds US$29.5 billion, cuts dividend

Company has struggled to digest the acquisition of Nextel

Sprint Nextel took a battering Thursday, reporting a US$29.5 billion loss for its fourth fiscal quarter, caused by a write-down from its 2005 acquisition of Nextel and a shrinking number of mobile subscribers.

The dour results contrast with the profit of US$261 million the company reported in the same quarter a year earlier.

Sprint Nextel's net operating revenue came in at US$9.8 billion, down from US$10.4 billion a year prior. The lower revenue and write-down meant the company's stock lost US$10.36 per diluted share.

Excluding the Nextel write-down, the company said it would have earned $0.21 cents per share, compared to $0.29 per share a year prior.

CEO Dan Hesse cited "deteriorating business conditions" and warned that it would take time before Sprint Nextel could improve its performance. No dividend will be paid "for the foreseeable future," Hesse said.

Sprint Nextel has struggled to digest the acquisition of Nextel. The merger was intended to drive up the average revenue per user (ARPU) of its subscribers, but fierce competition among wireless companies has quashed those hopes.

Post-paid ARPU fell to US$58 for the fourth quarter, down from US$59 in the third quarter and more than US$60 in the fourth quarter of 2006, Sprint Nextel said. The loss was caused in part by lower voice revenues, but further losses were offset by increased data services revenue, the company said.

Last month, Sprint Nextel said it will lay off about 4,000 employees and close about 125 retail outlets. The layoffs and other cost-cutting measures are expected to save the company US$700 million to US$800 million a year.


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