KANSAS CITY, Mo. - Sprint Nextel Corp. watched another 1.3 million wireless subscribers head for its competitors during the third quarter, leading the company to post a loss that sent its stock skidding Friday.
Dan Hesse, the Overland Park, Kan.-based company's chief executive, told analysts that Sprint Nextel plans to work harder to attract new customers during the upcoming holiday season but acknowledged "we have yet to turn the corner."
"We made good progress on our operational priorities in the third quarter and resolved some key issues," he said. "Still, subscriber losses are too high."
The nation's third-largest wireless provider said it lost $326 million, or 11 cents per share, for the three months ending Sept. 30. It had earned $64 million, or 2 cents per share, in the same period a year ago.
Excluding one-time items, Sprint Nextel said it would have broken even during the quarter. On that basis, analysts surveyed by Thomson Reuters expected a profit of 3 cents per share.
Sprint Nextel's revenue fell 12 percent to $8.81 billion. Analysts expected $8.85 billion.
The company's shares lost 31 cents, or 8 percent, to close Friday at $3.37.
Since its 2005 acquisition of Nextel Communications Inc., the company has struggled with technical problems, unfocused marketing and difficulties integrating operations. Despite heavy investments to correct those problems, Hesse said the company still suffers from poor perceptions in the market.
Competing devices, such as Apple Inc.'s iPhone being sold through AT&T Inc., haven't helped, although Sprint has fought back with the Samsung Instinct and other comparable smart phones.
Sprint Nextel's wireless business reported a 13 percent decline in revenue to $7.5 billion as its subscriber base fell by 1.3 million. That included 1.1 million valuable "postpaid" customers who have contracts. That was worse than in the second quarter, when Sprint Nextel lost 901,000 subscribers, including 776,000 postpaid customers.
Postpaid churn, or the percentage of customers canceling service each month, was 2.1 percent, up from 2 percent in the previous quarter but below the 2.3 percent rate a year ago.
Hesse said the company would focus on slowing the losses of postpaid customers in the fourth quarter and expected the churn rate to be similar to the third quarter.
"Stabilizing revenue will be a focus area of ours going forward," he said.
JP Morgan analyst Mike McCormack said in a research note Friday that Sprint's "subscriber trends and guidance ... do not signal near-term improvement" and said he would continue to warn investors away from the stock, which has lost more than 70 percent of its value this year.
Also Friday, Sprint Nextel said it had changed the terms of its credit agreement, reducing the amount it can borrow to $4.5 billion from $6 billion but increasing the allowed debt ratio to 4.25 times earnings before taxes and other adjustments, up from 3.5 under the previous deal.
The company said it will pay higher interest under the new agreement and cannot pay cash dividends unless certain conditions are met. The company doesn't currently pay dividends to common shareholders.
Sprint also said it repaid $1 billion of the outstanding loan under the amended credit agreement.
Stifel Nicolaus analyst Christopher King said the debt moves likely would be viewed positively because they give Sprint Nextel "ample flexibility through the maturity of the agreement in 2010."
Sprint Nextel sits behind AT&T and Verizon Wireless in third place with 50.5 million customers. It fell further behind in the third quarter as AT&T and Verizon Wireless added 2 million and 1.5 million subscribers, respectively. Both said most of their new customers defected from other carriers.
Sprint Nextel said last week it was planning to hold on to its Nextel-branded network, which operates on a separate technology and has been responsible for a good portion of the subscriber losses. The move was seen as an indication that the faltering economy and tough credit environment made it impossible to sell the network at a reasonable price.