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Sprint's shares plunged more than 15% Friday morning after the company said it will cut about 4,000 jobs and close 125 stores to cut costs to improve its financial performance, the company announced Friday in a statement. Sprint's shares sank $2.06 to $9.51 in early trading Friday.Sprint (NYSE: S), the No. 3 wireless carrier, said the action would lower labor costs by about $700-$800 million annually. Sprint said the jobs cuts would occur nationally, and would include managers.
The action comes after the company announced that it lost an additional 683,000 customers last quarter, which brought 2007 customer losses to 1.2 million.
No 3. carrier Sprint has been stung by customer departures, as customers have been lured to competitors AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ), which feature more-popular phones/PDAs and better service. Moreover, although Sprint's call quality and network has improved in the past six months, Sprint has found it difficult to reverse the company's earlier reputation as one of the worst call networks in the mobile sector. In addition to Sprint's aforementioned attrition problem, analysts believe that reputation is holding down subscriber recruitment.
Prudent action
Analyst C. Leonard Bauer told BloggingStocks Friday that Sprint's cuts are prudent, and consistent with the company's restructuring effort.
"In 2007 Sprint almost had as many customer departures as Chicago's O'Hare Airport," Bauer said, with a chuckle. "Cost cutting make sense, given their revenue outlook. Sprint also needs to continue to improve customer service, keep fees down, and enhance their system to enable more broadband-esque activities such as video, because that's where the future is, big-time." Bauer added that he does not own Sprint's shares.
Bauer said that he expects 2008 Sprint's revenue to be essentially the same as the company's 2007 total: about $39.9 billion. "Given the level of restructuring, service improvements, and brand remake that Sprint has to undertake, hitting last year's revenue target would be an impressive accomplishment and a positive development," he said.
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Reader Comments (Page 1 of 1)
2-04-2008 @ 3:45PM
Jestnokc said...
as a former sprint employee... you are so right... sprint is plagued with customer service reps that are more focused on sales than providing good customer service... they are also plagued by a poor billing system that is so difficult to use that you only become a pro after 2 years of daily use... that is why they have such high hold times and poor service because no one including supervisors know what they are doing...every once in awhile you will run into someone who knows what they are doing... The call centers are in such a mess... I quit 5 weeks after completing traing because of poor internal customer service supervisors who did not follow through and my paychecks were never right
2-13-2008 @ 11:21PM
Marisa said...
Finally, The consumers are feeling what I've felt and seen upclose for the 7 years I worked at Sprint. They work really hard at making money for the company and do so at all cost. They train their reps to lie to their customers, play number games to make ends meet, cover up unbelievable internal issues and all at who's cost? The customer and their employees that's who! You're right the big boys at the top get their goodies and then the smaller peons (including managers) are left to basically fend for themselves once they've left to ride the next ride. Amazing it was the incompetence that was seen from some of their so called supervisors and managers, but the public would never know. Perhaps this is why they perform as they do...out of retaliation towards their higher authorities. (and the big boys at the top are too busy collecting their checks to see where the real problems lie or don't want to see!)...Not to mention the buying of Nextel which is not and probably will never be as great and or profitable as they thought it would be for the company! On top of that there so many internal cover up scandals and schemes and on so many levels that it would make the "Watergate" scandal look like a walk in the park! I just hope they realize that the truth will always come to surface in the light. Just ask any employee that is not afraid to speak the REAL truth! You are threatened if you mention the word "union" and heaven forbid if you make waves in the ocean! You'll get dropped just like a call in the middle of the Sahara dessert! Sad to see that a company that was once so bright now shines like a cubic zirconia, yet they'll tell you you're getting diamonds. I believe that with many prayers and a "Supersized" corporate overhaul they maybe able to float for another 5 years or so, but I wouldn't count on any life boats coming to their rescue! Then again ONLY time will tell!
1-18-2008 @ 10:58AM
kenw said...
Amazing, nothing in the co. release about how to stop the blood loss, just more of the same... slash your employees ('cept. for the ones that cause these problems). How about a strategic plan?? How about something that could justify the mega salaries of the top brass??
Frankly, this is why left-leaning Democrats w/ zero to offer end up w/ 50% of the vote (or more) these days. It's because the "capitalists" are no longer the Henry Fords, today's CEOs offer nothing and yet still expect the American people to lick their boots.
Last year Sprint slashed the payroll and it still sank. It's former CEO crashed the co. and walked away with 10s of millions... Now we have a new guy, and his first act is one of the last acts of the former failure...
Remember Pan AM and National Airlines?? Very much like Sprint. Pan AM bought National, a successful, lean, growing airline. The Dinosaur Pan AM got rid of all of National's leadership and installed their own. The result?? a total failure. Sprint bought Nextel and instead of taking the successes of Nextel, it turned Nextel into the same failure Sprint was. Now it wonders why it's bleeding all the high paying Nextel customers while it fires Nextel people, fails to support the network and tries to push those customers into the Sprint Network -- something they could have done on their own, if they wanted to be in the Sprint network.
Want some free advice Sprint?? Keep the Nextel people you have left. Read their playbook and do business as they did. Remember they had the same customer base as you with half the staff and they were adding customers as you were losing them.
Want to get rid of staff?? Get rid of the top level that collected paychecks and perks and insisted on doing things the old, failing way, since the merger.
For the rest? Empower them, get them feed the top with ideas from the bottom. Get the people talking to customers in the loop, get those working with venders in the loop. Let those who save you money have a say. Stop listening to the people who have clearly failed.
As an aside, maybe we should take outsourcing to its logical conclusion. Instead of outsourcing the employees to China and India, how about we outsource the "leadership team?" Let's get a Indian CEO for 35k / year and let him (or her) have a swing, it couldn't be worse than what we have here.
1-18-2008 @ 12:56PM
al said...
Could not agree more with the comments about Sprint. I believe that you will see massive write downs on the Nextel Purchase very soon. they paid way to much for the company, and should have had Tim Donahue running the whole organization. Running Nextel out of VA and Sprint out of Kan. is a joke. Lets hope that the new guy gets in there, gets his hands dirty, and gets rid of all the dead wood at the top of the food chain, and gets this once good company back on track before they unplug the whole thing. AT&T and Verizon have to be licking their chops, not to mention sharpening up the knives to cut Sprint apart
1-18-2008 @ 11:18PM
William said...
Had Sprint for a long time until they got the Idea of purchasing or merging with Nextel, They started over charging for nothing and refused to clear up the phony charges.Then the Customer Service talked to me like I was a Bad Dog. Now they will reap the benifits. They need to vanish from the Telephone services.
1-19-2008 @ 8:50AM
kenw said...
Oh, I had Sprint before Nextel too. The office I worked for had Sprint phones. Sprint Spectrum was OK as I remember, when they switched to PCS it went all downhill. I was overcharged, threatened with having my phone turned off if I didn't pay twice... When I left the co. I worked for, I kept the phone -- bad move. It took almost a year of fighting to get my refund. Sprint acted as if Spectrum and PCS were two different companies, so it was like trying to get a refund from Home Depot from Lowe's... They were rude, it took hours on hold just to get someone. When I got my refund, I dumped Sprint for Nextel.
So, yeah I was less then thrilled about the "merger," but I thought it was a merger -- that's what the claim was. However, it was a buyout and they dumped almost everything that made Nextel good and kept all the lousy Sprint Dinosaur mentality.
There was a reason Sprint was rated so low before the merger and had such a high churn rate. and guess what? Here we are today with growing cell companies and Sprint is sucking wind, and bleeding customers... It's the same reason as before the merger.
Until Sprint dumps its mentality and it's useless long term Sprint employees, it will never recover. Hey Sprint, you bought Nextel, be smart and use what you bought!
I do see a bit of silver here, usually when a co. says it's going to slash costs and fire staff, the market loves it and the stock rallies (always hated that..) But this time, the stock sank. Could it be that the street is telling Sprint, you can't just do this w/out a plan to recover and expect good results. Again for the millions they pay the top brass, you'd think they could come up with something new for once -- instead of the tired old "let's fire the working men and women!"
BTW, what employees are they dumping?? Is it across the board or are they targeting waste? Are they getting ride of employees with lousy reviews? If they slash the payroll by getting rid of good people...
More and more I like that outsourcing the CEO thing...
1-22-2008 @ 1:26PM
Dana said...
I hate it when people say dump the employess who have been with the company long term. They try to do their job with the tools they have to work with.
Our country is headed no were but down and every company out there is hurting even the best are hurting. The rich keep getting rich as the poor become even poorer and the middle class is now the new poor.
What Sprint needs to do is this, empower there employees to get out and about with there phones show people how to use a cell phone and what it can do for the customer, also put their customers in their comercials showing what Sprint has done for them. They need to get the word out.
When a customer does have an issue with coverage or whatever, listen and try to fix the issue, the problem with that approach there are to many people out there who are not honest abe and want to blame sprint for the phone not working, and forget they let sally teeth on the phone which is water damage to a phone, why parents do that I have no clue, but yet those some people are the ones blaming Sprint for the phone not working and demending a new phone. Hmmm I wonder if I would go to Sears and said my TV is not working, and see if they give me a new one, nope they hand me a bill and I pay it to get it fix or buy a new one and it is not free.
People out there need to be smart, if you leave your cell in bathroom it gets wet, just like your mirror, wash it samething, standing in the run waiting on a bus or cab you are wet, what about the phone in your pocket, oh yes it will dry out however it will stop working soon, and you will be calling Sprint to say guess what my phone i stoped working and I want a new one and do not want to pay for it..Does that seem right for Sprint to pay for phones that they did not missuse? The list goes on, I read in yahoo site that a guy is even giving advise to those who want sprint to give them a phone, after they dropped the phone and it does not work anymore, and is this right also.
I wander if I could get a new car after I wrecked mine and call the dealership and blame them for my wreck, I am sure they would ship me one right out. food for though.
Sarah