Sprint Sees Lower-Than-Expected 4Q Revenue

Sprint Corp.

Sprint, the No. 3 long-distance telephone company, said its main FON Group expects revenues in the low $4.0 billion range, compared with its previous target of $4.1 billion to $4.2 billion.

The company blamed the shortfall on network services revenue growth at the low end of its expectations and product distribution revenues below its target.

While it maintained its revised fourth-quarter earnings of 31 cents to 33 cents a share, Sprint said its operating cash flow will be in the low $1.0 billion range in the quarter and in the upper $4.6 billion range for the full year.

The company had previously estimated full-year operating cash flow at about $4.7 billion.

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It expects to record slightly less than the expected $2 billion in one-time items associated with the termination of its ION high-speed network project. ION - Integrated On-demand Network - allow customers to make phone calls, send and receive faxes and cruise the Internet over a single phone line.

Sprint PCS, Sprint's wireless unit, said it added 1.11 million direct subscribers, fewer than the 1.3 million analysts were expecting, due to lower-than-normal holiday sales. It ended the year with 13.6 million customers. Its affiliate operators added 381,000 net new customers and ended the year with 2.04 million customer

The nation's No. 4 wireless operator said its customer turnover rate was 3.0 percent, in line with expectations.

However, it warned that its full-year operating cash flow, or EBITDA (earnings before interest, taxes, depreciation and amortization), would fall below expectations. It now expects EBITDA in the upper $300 million range for the fourth quarter and in the low $1.5 billion range for the full year.

Sprint PCS previously expected EBITDA to be closer to $1.6 billion.

"EBITDA is expected to be impacted by increased spending on marketing and other operating expenses and lower wholesale margins. These items were partially offset by lower variable selling expenses," the company said.

Shares of Sprint slipped 17 cents to $19.10 and shares of Sprint PCS fell 91 cents to $17.05 early Tuesday on the New York Stock Exchange.

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