Sprint Nextel (S) Bombs Q4, Cuts 4,000 Jobs, More Coming

Has Sprint Nextel finally hit bottom? This morning, the No. 3 wireless carrier released Q4 subscriber stats so pitiful that they were even below Wall Street's reduced expectations.

Last quarter, during the busy holiday shopping season, Sprint lost 683,000 "post-paid" subscribers -- its most valuable customers, which have long-term contracts and pay bills each month -- almost three times the 250,000 that the Street estimated they would lose. Post-paid losses are especially damaging, as those customers probably signed on to two-year contracts with archrivals AT&T and Verizon Wireless, and will be hard for Sprint to win back.

Sprint also lost 202,000 less valuable, pre-paid subscribers during Q4. These losses were only marginally offset by a net gain of 500,000 wholesale subs via "virtual" carriers like Virgin Mobile, 256,000 Boost Unlimited subs, and 20,000 subs via affiliate channels. Still, a disaster of a quarter/year for Sprint, which finished 2007 with 53.8 million subs, just 600,000 more than it started the year with. (Meanwhile, AT&T and Verizon Wireless grew by millions of subs each quarter.)

As WSJ reported last week, Sprint is also cutting costs: The company will start by slashing 4,000 jobs and 4,000 third-party distributors, and will close 125 (8%) of its company-owned stores. Sprint expects this will save $700 million - $800 million by the end of this year.

And more cuts could come soon: In a note this morning, Goldman Sachs wireless analyst Jason Armstrong said these cuts were probably decided before new CEO Dan Hesse took his post last month. "He has historically been aggressive on cost cuts and conservative on guidance, so look for more reductions when he finalizes his plan," Armstrong said.

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