Sprint Loses 272K Customers, Logs $192M Operating Loss in Q2

Sprint plans an additional 2,000 layoffs as part of its reaction to its disappointing fiscal second-quarter results.

Sprint earnings and layoffs

Sprint lost $192 million on consolidated net operating revenue of $8.5 billion in the company's second fiscal quarter of 2014, ended Sept. 30, while also losing some 272,000 postpaid customers in the quarter, putting a sour note on its earnings call on Nov. 3.

"These results occurred during a transitional quarter for the company, as Marcelo Claure was appointed the new president and chief executive officer in mid-August," the company said in a statement, as it attempted to lessen the impact of the results.

"We have started a transformational journey," Claure said in a statement. "While the company continues to face headwinds, we have begun the first phase of our plan and are encouraged with the early results. Every day, we are focused on improving our standing with consumers, improving our network and controlling our costs."

Other bad news in Sprint's second-quarter earnings report was the announcement that another 2,000 employees will lose their jobs as the company tries to save money and turn its financial performance around.

"Sprint is undertaking a comprehensive review of all expenses to optimize its cost structure and is targeting $1.5 billion of annualized cost reductions, compared to 2014 spending levels," the company said in its statement. "As part of the cost reduction efforts, the company is announcing additional headcount reductions of approximately 2,000 positions. Inclusive of recent work force actions, total labor cost is expected to decline $400 million on an annualized basis, which will include internal and external labor costs."

At the same time, Sprint also said it is beginning to see promising results from recent price drops and service increases in its cellular plan pricing aimed at adding users. Postpaid phone gross additions grew 37 percent month-over-month in September and increased year-over-year for the first time in 2014, the company stated.

In addition, Sprint platform postpaid phone net losses slowed by nearly 60 percent in September, while Sprint achieved its most successful iPhone launch in the carrier's history, with record sales volumes, according to the company.

More still needs to be done, Claure said. "While we are pleased to see customers respond to our new value proposition, we must continue to take bold actions to reach our goal of returning to growth in postpaid phone customers," he said in his statement. "By improving our competitive position and driving costs out of the business, we plan to deliver long-term value creation."

Sprint narrowed its operating loss in the latest quarter to $192 million, compared with the $398 million operating loss posted in the same quarter a year ago, the company reported. That lower loss was due primarily to lower depreciation and amortization, as the year-ago period included accelerated depreciation related to Code Division Multiple Access (CDMA) assets.

Postpaid tablet net additions were 261,000 in the quarter, while phone losses were 500,000 and other device losses were 33,000. The company had 55 million connections at the end of the quarter.

Sprint's major competitors—T-Mobile, Verizon Wireless and AT&T—also recently announced their latest quarterly results.

T-Mobile gained 2.3 million users in its third quarter, ended Sept. 30, while its revenue increased by 9.9 percent. T-Mobile US boosted its revenue to $7.35 billion in the quarter, up from the $6.68 billion in revenue posted in the same quarter in 2013.

T-Mobile had been the apparent target of several acquisition attempts earlier this year, including one by Sprint that was dropped in early August after the move was opposed by regulators, according to reports. Sprint had been rumored for months to be seeking a merger with T-Mobile so that the two struggling companies could join together and fight harder to compete with mobile powers Verizon Wireless and AT&T. Iliad wanted to buy T-Mobile US to bolster its global aspirations.

AT&T reported gaining 2 million wireless customers in its third quarter, which helped drive up the carrier's wireless sales 5 percent and overall revenues by 2.5 percent from the same period last year. AT&T said it generated $33 billion in revenue in the third quarter, with $18.3 billion of that coming from the carrier's wireless business, while net income came in at $3 billion, down from the $3.8 billion in the third quarter of 2013.

Verizon reported $31.59 billion in overall revenue in its third quarter of 2014, ending Sept. 30, up 4.3 percent from the $30.3 billion posted in the same quarter one year ago, while its wireless unit captured another 1.5 million customers who will add more revenue to the company's bottom line. Quarterly profit for Verizon came in at $3.7 billion, compared with $2.23 billion that was posted for the same quarter a year ago.