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sprint posts 29.5 billion loss

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    Sprint Posts $29.5 Billion Loss on Nextel Writedown


    Sprint Nextel Corp., the third- biggest U.S. wireless carrier, posted a $29.5 billion loss and will eliminate its dividend as customers defected and it wrote down the value of the purchase of Nextel Communications Inc.

    The fourth-quarter net loss was $10.36 a share, compared with net income of $261 million, or 9 cents, a year ago, Sprint said today. Sales fell 5.7 percent to $9.85 billion, missing the $9.93 billion average estimate of analysts.

    Sprint lost 683,000 contract subscribers last quarter amid complaints of dropped calls and poor service. Chief Executive Officer Dan Hesse, who took over in December, may be forced to undercut price reductions at AT&T and Verizon Wireless, which began offering plans last week for unlimited mobile calling for $99.99 a month.

    ``He wants to be different in the marketplace,'' said Jennifer Fritzsche, an analyst at Wachovia Capital Markets in Chicago who follows AT&T and Verizon Communications Inc. ``Sprint is going to have to come out with a lower price.''

    Sprint recorded $29.7 billion in expenses to write down the value of its wireless unit. The reduction in goodwill, the premium a company pays in an acquisition for reputation, customers and other intangible assets, stems from the $36 billion 2005 purchase of Nextel and related companies.

    Leaving out items such as the writedown, fourth-quarter profit was 21 cents a share, topping the 18-cent average of analysts' estimates compiled by Bloomberg.

    Sprint, based in Overland Park, Kansas, fell 34 cents to $8.95 yesterday in New York Stock Exchange composite trading. The shares had fallen 32 percent this year before today.

    Eliminating Jobs

    Last quarter's subscriber losses brought the year's total to about 1.2 million defections from customers who had been on contracts. San Antonio-based AT&T Inc. lured 1.2 million of those customers last quarter and Verizon Wireless, co-owned by Verizon Communications Inc. and Vodafone Group Plc, took 1.6 million.

    Hesse, who took the helm when Sprint ousted Gary Forsee, announced plans last month to eliminate 4,000 jobs and close a fifth of its retail sites. He replaced three top executives, including Chief Financial Officer Paul Saleh, and moved the headquarters to Kansas to save travel costs. Sprint had split its managers between Kansas and Virginia.

    AT&T won customers with handsets such as Cupertino, California-based Apple Inc.'s iPhone, which combines a mobile phone with an iPod music player. Sprint countered last fall with Taoyuan, Taiwan-based High Tech Computer Corp.'s Touch, which features a touch screen similar to the one on the iPhone.

    Seven analysts recommend buying Sprint shares, 23 suggest holding them and three advise selling the stock, according to data compiled by Bloomberg.

    Sprint may lose about 824,000 subscribers if reseller Qwest Communications International Inc. chooses a new mobile-phone partner. Denver-based Qwest, the home-phone provider in 14 U.S. states, has had talks with Verizon Wireless and Sprint about its wireless business after CEO Edward Mueller said his company can't sell the newest handsets under its current agreement.

 
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