Sprint Sales Soar, But M&A Costs Hit Profit

A sharp rise in first-quarter revenue at Sprint Nextel failed to offset acquisition and integration costs, the carrier reported Wednesday.

Net income for the three months ending March 31 dipped 11 percent to US$419 million, or $0.14 per share, compared with $472 million, or $0.31 per share, in the same period a year earlier.

Net revenue at Sprint Nextel, the third-largest wireless carrier in the United States, soared 66 percent to $11.5 billion from $6.9 billion a year earlier.

But the company reported $105 million in costs related to the Sprint merger and integration of Nextel and to the spin-off of Sprint’s local telephone business. The costs reduced net income by $64 million in the quarter. Sprint Nextel also recorded restructuring and asset impairment charges of $67 million, further reducing net income by $41 million.

In August 2005, Sprint bought rival Nextel for $35 billion.

Excluding merger and other costs, the company’s earnings per share came to $0.35, short of the $0.37 forecast by analysts polled by Thomson Financial.

Wireless revenue in the first quarter more than doubled to $8.5 billion from $3.9 billion a year ago.

The operator added 1.3 million customers in the first quarter, ending the period with 51 million wireless customers.

In the second quarter, Sprint plans to spin off its local phone business to shareholders under the name Embarq.

For 2006, Sprint maintained its revenue forecast of $41 billion, well under analysts’ forecast of $46.2 billion.

-John Blau, IDG News Service

For related news coverage, read Sprint Nextel to Acquire UbiquiTel.

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