Sprint sees a silver lining
In the 1970’s cult comedy hit, Monty Python and the Holy Grail, an elderly man argues against being put on a cart carrying victims of the Black Plague, claiming “I’m not dead yet!”
Sprint (S) may be the modern version of that man.
The struggling cellphone provider says its turnaround plan is working, pointing to its latest quarterly financial report which shows the company had a net subscriber gain of 675,000 and has done a better job hanging on to key postpaid customers. Sprint is so confident about its business, it’s boosting the company’s full year earnings forecast.
That news came just hours after Sprint announced a major shakeup in its C-Suite, replacing CFO Joseph Eutenaurer with Tarek Robbiati, and naming Gunther Ottendorfer COO of technology and John Saw CTO.
But Yahoo Finance Senior Columnist Michael Santoli isn’t convinced Sprint has turned the corner.
“You can’t say it’s finally working in any long-term sense,” he argues. “It was a better than expected quarter. There was a very small add in net subscribers, that’s good news.”
Still, Santoli believes Sprint is hamstrung because it is a bit of a one-trick pony in the battle for wireless customers.
“The problem is Sprint slipped to number four in market share behind T-Mobile (TMUS) and obviously Verizon (VZ) and AT&T (T) and that shows they really can’t do much except compete on price,” he explains. “It’s not very profitable growth, even if they do get little bits of growth.”
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Yahoo Finance’s Jen Rogers points out Sprint has been playing up the price differential in an effort to convince people to switch from its rivals.
"They have been trying very hard to compete on price, telling people we can cut your cellphone bill in half,” she notes. “They have been trying to reduce their own costs, trimming staff, adding stores.”
Santoli feels Sprint has to do even more.
“Necessity says you simply have to try to get costs even more lean, try to take a little bit of market share and essentially play T-Mobile’s game,” he argues. “T-Mobile has been that aggressive marketer, and I think they just have to scrap it out with them in the market.”
However, Santoli has a better idea…if only the government would agree.
“The right strategy is to merge with T-Mobile and make four players three players,” he says, noting that Sprint tried to buy its rival last summer before regulatory hurdles forced Sprint to give up. “But they’re not allowed to do that.”
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