Sprint Earnings Not Helped by 2,000 More Firings

The company gave guidance for the third quarter, saying it expects significantly higher gross additions and upgrade volumes. Additionally the loss of postpaid phone customers has pressured wireless service revenue over the past few quarters, and this trend is expected to continue into the next quarter. Thomson Reuters has a consensus estimate of $8.67 billion in revenue.

There was a net loss for the second quarter of $192 million compared to the same quarter in the previous year of $398 million.

Sprint said it would cut another 2,000 jobs as it seeks to optimize its cost structure. The company is targeting $1.5 billion in annualized cost reductions compared with 2014 spending levels. About $400 million of the cost reductions will come from this and other recent employee firings.

Sprint had total platform net additions of 590,000 in the second quarter. Gains consisted of 827,000 whole sale net additions and 35,000 prepaid net additions less 272,000 postpaid net losses. The postpaid phone gross additions grew 37% month-over-month and posted the first increase in year-over-year for 2014.

The company received 94 first-place or shared first-place RootScore Awards for reliability in call and/or text performance in cities across the country. Sprint also expanded its 4G coverage to over 260 million people.

Sprint’s new CEO Marcelo Claure said:

While the company continues to face headwinds, we have begun the first phase of our plan and are encouraged with the early results. Every day we are focused on improving our standing with consumers, improving our network and controlling our costs.

While we are pleased to see customers respond to our new value proposition, we must continue to take bold actions to reach our goal of returning to growth in postpaid phone customers. By improving our competitive position and driving costs out of the business, we plan to deliver long-term value creation.

Credit Suisse upgraded Sprint to a Neutral rating from Underperform with a price target of $6, on October 30.

JP Morgan reiterated a Neutral rating for Sprint but moved its price target down to $6 from $8, on October 13.

Shares of Sprint closed Monday up 4.5% at $6.20. Following the release of the earnings report, the initial response in the post market was negative and shares were down 5% at $5.89.

The company’s stock has a consensus analyst price target of $7.28 and a 52-week trading range of $5.36 to $11.47. It has a market cap of $24 billion.