UPDATE 4-Sprint customer numbers improve but fail to impress

* Q3 share loss $0.30 vs Street view of $0.28 loss

* Q3 Rev $8.15 bln vs Street view of $8.04 bln

* Loses 107,000 postpaid subs, analyst view loss 173,000

* Sprint shares down 9 pct
(Rewrites, executive comment on tablet; updates share price)

By Sinead Carew

NEW YORK, Oct 27 (BestGrowthStock) – Sprint Nextel’s (S.N: ) failure
to turn around its wireless subscriber business in a period
when investors bet heavily on growth sent its shares down about
9 percent.

The No. 3 U.S. mobile operator promised a better fourth
quarter, but did not specify if it would continue to lose
subscribers or begin adding more high value, bill-paying
customers again.

Helped by the EVO smartphone from HTC Corp (2498.TW: ),
Sprint the No. 3 U.S. mobile operator, posted a third-quarter
net loss of 107,000 customers who pay monthly bills compared
with analyst expectations for a loss of 173,500 and losses of
801,000 customers a year earlier.

But this was not a big enough change for shareholders who
had pushed its shares up 20 percent since late August in the
hope this customer segment would start growing again in the
third quarter.

“Expectations got ahead of themselves,” said Mizuho analyst
Michael Nelson, who saw the results as a “vast improvement”
from previous quarters, but he noted it would take Sprint
“another couple of quarters to start growing the postpaid
base.”

Sprint has struggled to retain customers since its 2005
purchase of Nextel Communications, which operated the iDen
network that was incompatible with Sprint’s existing technology
and does not support high speed Web surfing.

While the company has sought to address complaints over
customer service issues and network problems, including a
possible plan to combine the two networks, Sprint is still
losing customers it acquired from Nextel.

Its rivals have fared much better.

Verizon Wireless added 584,000 postpaid customers in the
third quarter and AT&T Inc (T.N: ), the No 2 U.S. mobile service
and exclusive U.S. provider for Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPhone,
added 745,000 subscribers.

SMARTPHONES PRESSURE MARGINS

Like other wireless providers, Sprint is dependent on
smartphones and new devices for growth. But it comes at a
cost.

The company’s Chief Executive, Dan Hesse, said more new
device launches would put further pressure on profits and would
mean more subsidies in the fourth quarter, the busiest quarter
of the year for phone sales.

“We hope they put pressure on our subsidies,” he told
reporters on a conference call. “Its better than the
alternative.”

Sprint reported its third-quarter net loss had widened to
$911 million, or 30 cents per share from $478 million, or 17
cents per share in the same quarter a year ago.

The latest quarterly loss included a massive tax-related
charge and was 2 cents wider than Wall Street expectations of
28 cents per share, according to Thomson Reuters I/B/E/S.

One bright spot in the third quarter was a slight revenue
increase to $8.15 billion from $8.04 billion a year earlier and
compared with the average analyst expectation for $8.04
billion, according to Thomson Reuters I/B/E/S.

It was the company’s first revenue increase that was not
caused by an acquisition since 2007, but the company’s Chief
Financial Officer Bob Brust noted revenue would come under
pressure in the fourth quarter in both landline and wireless.

Hesse would not say if the company could increase revenue
again in the fourth quarter.

He told reporters consumers should also expect a tablet
computer based on the WiMax technology, which powers Sprint’s
fourth-generation (4G) high-speed wireless service.

“You should be surprised if that wasn’t one being planned.
We won’t say when but stay tuned,” he said.

Sprint has the advantage of being the first U.S. operator
to sell phones based on 4G services. Its biggest rival Verizon
wireless will not have 4G phones until next year.

But Hesse said on a conference call that: “We know they’ll
be on our heels pretty quickly.”

The executive said Sprint is in talks with its Clearwire
Corp (CLWR.O: ) venture about options for new funding to expand
its network, which Sprint uses to offer 4G services. One option
could be for Sprint, which already owns about 55 percent of
Clearwire, to invest more in the venture.

Sprint shares were down 45 cents, or 9.4 percent, at $4.32
in midday trading on the New York Stock Exchange.
(Reporting by Sinead Carew; editing by Derek Caney, Dave
Zimmerman and Andre Grenon)

UPDATE 4-Sprint customer numbers improve but fail to impress