Could NFC gamble bring Sprint back in profit?Feature
Posted by Seth PlanckJune 02nd, 2011 at 1:23 PM Filed Under Featured
Sprint takes a gamble and may potentially turn its fortunes around, could NFC get Sprint back in profit?
Is it a pipe dream or could 2011 turn the tide and bring Sprint back in profit? When it comes to Sprint everyone knows they have had a mixed bag of fortunes over the last few years. Sprint endured three years of unrelenting hell where customers were flocking away, prepaid accounts disappeared at record speeds and as time went on it all just accelerated. Sprint couldn’t ebb the flow and things looked pretty bleak for the “Now Network”. Do you remember the headlines?
2009: “Sprint loses 257k subscribers in first quarter.” NYT
2009:“Overall, Sprint lost about 200,000 subscribers in the fourth quarter, ending the year with 48.1 million customers. Approximately 10.7 million of those were prepaid subscribers. The company also posted a fourth-quarter net loss of $980 million on revenues of $7.9 billion.” Washington Post
|Revenue||US$ 32.563 billion (2010)|
|Operating income||US$ -595 million (2010)|
|Net income||US$ -3.465 billion (2010)|
|Total assets||US$ 51.654 billion (2010)|
|Total equity||US$ 14.546 billion (2010)|
Sprint turns the tide by embracing high-end Android devices but is it enough to see Sprint back in profit?
Sprint‘s launch of the HTC EVO 4G represented a new invigorated Sprint. It was first to market with its 4G service WiMax, beating Verizon’s LTE service by a few months. The HTC EVO 4G was the biggest, most powerful smartphone on the market and people started switching back to Sprint. The headlines started to change:
2010“Sprint reports $760 million net loss for Q2, That gain is at least partly attributed to strong sales of the HTC EVO 4G, and by the company‘s best ever year-over-year improvement in net postpaid subscribers, which helped boost the number of wireless subscribers by 110,000 (for a total 48.2 million customers).” ~ bizjournals
Still losing money, there was little hope of seeing Sprint back in profit but the signs were encouraging. Gone was the perception of a clunky network with ugly phones. Sprint now had powerhouse industry leading phones and its WiMax was the fastest data plan on the market. The headlines kept on improving:
2010“The final three months of 2010 represented one of the best quarters in years for Sprint Nextel Corp. as the nation’s third-largest wireless carrier reported a 5 percent gain in revenue, a slightly smaller quarterly loss and the first increase in contract wireless subscribers in more than three years.” ~ bizjournals
2010“Sprint, Gains 1.1 Million Wireless Customers.” ~ Engadget
Even the embattled CEO can visualize the day he brings Sprint back in profit:
“I am pleased with the progress Sprint made in 2010 in each of our three focus areas. Sprint‘s customer experience and brand continued to strengthen during the year, and we generated excellent cash flow, It had been almost five years since we added over a million customers in a quarter, and the annual improvement in postpaid subscriber results of 2.7 million vs. the previous year is unprecedented in the history of the U.S. wireless industry.” said Dan Hesse, Sprint CEO.
Sprint is looking after its customers and is now reaping the rewards. If customer satisfaction is an indicator this year could end in a situation where Sprint’s back in the black, a survey that measured customer satisfaction for all wireless networks found that Sprint is now matching Verizon for the top spot.
Risks taken, open source embraced and teaming with Google a recipe to bring Sprint back in profit?
Earlier this year Sprint teamed up with Google to bring Google Voice to its customers. This project set Sprint apart from its competitors and even though the launch did not go off without a hitch, the project itself illustrated how the new Sprint views its service and indeed its customers. Last week Sprint alongside Google announced its support for the Open Alliance. Committing to not charging for NFC payments, Sprint moved away from the Isis Joint Venture and profit from transactions. This is a gamble, but one that could bring Sprint back in profit and help define the new emerging NFC industry. Sprint now is the only wireless carrier in the U.S that supports NFC payments in the form of Google Wallet. Sprint currently has the only NFC capable phone on the market, the Google Nexus S. As Google finishes its trial of the new service, Sprint can expect a boon as customers enchanted by the concept of mobile payments pick themselves up a Nexus S on the Now Network. More NFC-enabled handsets are due to hit this within the next few months, and with Sprint‘s growing collection of super phones this year is looking rosy. Looking forward even further than that, Sprint has stated that its commitment to WiMax is not exclusive to adopting LTE. If Sprint does support LTE we don’t feel it will be long until we see Sprint back in profit and headlines stating how the Now Network looks better in black.
Today Sprint is still losing money and yet its share price is rising faster than Big Red‘s. This stands as testament to what happens when a company looks after its customer base. Share holders want to see Sprint back in profit, but it isn’t stopping the shares trading well.
So congratulations to Dan Hesse and Sprint for the complete turn around. Customers are impressed with the new open, fast network that woos some of the best smartphones on the market and who are walking their talk with customer satisfaction hitting highs. Keep on keeping on, Now Network, so the next headline we read can state Sprint back in profit.