Sprint Nextel's profit fell 77 percent in the third quarter as it lost more subscribers, and it warned of continued weakness in the fourth quarter, sending shares down 5 percent Thursday.
The third-largest U.S. mobile service provider, which is searching for a new chief executive, also reported quarterly revenue that was below Wall Street expectations and withdrew its 2008 forecast for operating income before depreciation and amortization (OIBDA).
"Overall I think they're pretty disappointing results. It seems like all channels were weak in the quarter," said Stanford Group analyst Michael Nelson. "The outlook looks equally disappointing with no real turnaround in sight."
Sprint said it lost a net 60,000 wireless subscribers in the third quarter, compared to Nelson's forecast for a net addition of 283,000.
Profit fell to $64 million, or 2 cents per share, from $279 million, or 9 cents per share, a year earlier.
Excluding items such as merger-related amortization, it earned 23 cents per share a penny above Wall Street expectations according to Reuters Estimates.
Net operating revenue fell 4 percent to $10.04 billion, below the average analyst estimate of $10.23 billion.
Sprint has been losing market share to bigger rivals such as AT&T and Verizon Wireless, a venture of Verizon Communications and Vodafone Group.
It has reported a decline in valuable postpaid customers -- who pay monthly bills -- for four quarters out of five, and said on Thursday that it expects net customer additions to continue to "be pressured" in the fourth quarter.
Sprint's chief executive, Gary Forsee, stepped down last month and the company's board is working as quickly as possible to find a replacement, said Chief Financial Officer Paul Saleh, who is acting CEO, on a conference call.
Market Share Loss
Sprint withdrew its target for double-digit growth for 2008 OIBDA and said it would comment on its 2008 outlook early next year.
It still expects full-year 2007 consolidated revenue to be slightly below $41 billion, and adjusted OIBDA to be slightly below $11 billion.
The company also lowered its 2007 capital investment budget to the mid $6 billion range, compared with its prior expectation for about $7.2 billion.
Stanford Group's Nelson said the cut in capital expenses was a good sign.
"In a time when the operations are underperforming and they're looking for a new management, that's probably a prudent decision," he said. But the analyst added, "They need more than just cutting capex."
Sprint's postpaid customer cancellation rate, also known as churn, was 2.3 percent, up from 2.0 percent in the second quarter but down from 2.4 percent in the year-ago quarter.
Sprint has lost more than a third of its value since it bought Nextel Communications in August 2005 as it has struggled to integrate the acquisition amid technical problems.
Shares fell to $16.25 in premarket trading from their Wednesday close on the New York Stock Exchange of $17.10.