KANSAS CITY, Mo. -- Sprint Nextel Corp. reported Wednesday a 55percent drop in fourth-quarter income, dragged down largely byexpenses related to the merger last year that created the company.
The telecommunications carrier also forecast that its 2006 revenuewill be at least $41 billion or more, while the average estimate hasbeen $46.8 billion. Its shares fell $1.13, or 4.5 percent, to closeat $23.80 Wednesday on the New York Stock Exchange.
Sprint Nextel posted a quarterly profit, after preferreddividends, of $195 million, or 7 cents per share. That compared withSprint Corp.'s earnings of $435 million, or 29 cents per share, inthe same period a year ago.
Adjusted earnings, after removing the effects of amortization andspecial items, were 33 cents per share in the most recent quarter, apenny below the estimate of analysts polled by Thomson Financial.
Fourth-quarter revenue of $11.3 billion slightly topped analysts'expectations of $11.28 billion. Sprint's revenue in the same periodlast year, before the acquisition of Nextel Communications Inc., was$6.93 billion.
"Sprint reported solid financial results today, which, in general,show steady, if not stellar, progress in the general business andmerger integration," Banc of America Securities analyst David Bardentold investors in a note Wednesday.
Sprint in August bought Nextel in a $35 billion deal that createdthe nation's third-largest wireless provider. It is based in Reston,Va., and has operational headquarters in Overland Park, Kan.
Gary Forsee, Sprint Nextel's chief executive officer, toldanalysts the company was on track with combining operations of thetwo former rivals. He also said the company was reversing its earlierdecision not to provide dividends after it spins off its localtelecom division by the end of May.
"We continue to make great progress against the myriad of mergerintegration plans," Forsee told analysts during a conference call.
The company said its wireless division gained 1.4 million indirect subscribers during the quarter, meeting analyst expectations,and 651,000 subscribers through wholesale and affiliate channels. Wireless revenues for the quarter were $8.2 billion, far beyond the$3.8 billion in sales from a year ago and 10 percent above what thecompanies would have taken in had they already been merged then.
Sprint Nextel said the average revenue per user declined to $63from $65 as pricing plans have reduced overage and roaming charges.The percentage of people canceling service, which the industry callschurn, decreased to 2.1 percent from 2.2 percent a year ago and waseven with the previous quarter.
Long distance continued to falter as customers flocked to wirelessand the Internet, reporting a 4 percent decrease in sales to $1.66billion from $1.73 billion a year ago.
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