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Content Tagged with Featured + sprint
Sprint Writes Down Nextel, Posts $29.5 Billion Loss
If you thought eBay taking a hefty writedown for its mistake — I mean Skype was shocking — then Sprint’s Nextel deal writedown is going to leave you awed. Sprint Nextel reported a $29.5 billion loss, scratched its dividend and lost 683,000 customers. The company wrote down $29.7 billion of the $36 billion it paid for Nextel in 2005.
Taking that out of the equation, the company made some money, but things aren’t all that great for Sprint. Bloomberg reports that it is the fifth-largest loss among S&P 500 companies since 1990. In other words, there have been four other disasters bigger than this.
Anyway, there is more bad news in the offering, and new CEO Dan Hesse didn’t sugarcoat anything. With 1.2 million subscribers expected to switch away from Sprint, Hesse admitted that things are going to be tough.
“The fourth-quarter financial results reflect the challenges facing our wireless business… more difficult than what I had expected to encounter…will take time to produce improved operating performance. Our near-term subscriber and financial results will continue to be pressured.” [The Washington Post]
Hesse said Sprint will be the new brand, and they will launch the QChat in the second quarter.
That said, I wonder if Sprint can be saved? Take our poll and have your say.
Cellular Biz & Its $99 Problem
I’ve been watching the mobile industry commit hara-kari over the past few days. US Cellular is the latest to join this mad dash to the bottom. Their new $99 unlimited calling plans make me wonder if they have actually thought through this move and its long-term implications.
A friend of mine, a veteran of the long-distance wars who’s worked with the phone companies, both the wired and the wireless kind, described the big three mobile carriers — Verizon, AT&T, and T-Mobile — as dumb, dumber and dumbest.
These moves remind him of the crazy 1990s, when Sprint, MCI and AT&T fought over long-distance minutes by offering lower prices and thus slowly destroying their ability to make money to support their bloated infrastructure. It’s pretty much the same situation here — but the pain is going to be felt much sooner.
Here is why: I am one of the high-end customers of AT&T, locked into a 2-year contract for my iPhone. I’ve been paying $99 a month (plus about $40 for data and messaging) for 2,000 rollover minutes, free weekends and evenings.
It’s never been tough for me to go over the 2,000 minute-limit, since my mobile is my primary phone. Result: I end up paying between $25 to $150 in overages, depending on the amount time I spend on the phone. I am the perfect customer, the kind that makes up for the ones at the bottom of the pile who either don’t spend enough money or didn’t care to get big buckets of minutes.
But now I am going to get an unlimited plan. And that is the big question: Why would you as a company limit the amount of money spent by some of your best (and I mean high-spending) customers? I suspect most of the people who are going to sign up for these $99-a-month plans are going to be folks like me — existing customers who are looking to bring their wireless bills under control.
These are particularly attractive options for small biz, startups and web workers. Now your communication costs are pre-determined, which is a good way to budget. I am asking the GigaTEAM to switch to a $99 plan (on offer from whatever mobile operator they use) and also putting the PBX-land line option on hold…forever.
Will iPhone spark wireless wars?
Roy, a doorman for my apartment building, stopped me this morning to chit chat. Knowing my affection for all new mobile phones, I wasn’t surprised that he asked to play around with my Nokia N95. “Are you going to buy the iPhone?” he asked, seeking a second opinion since he has already made up his mind and is going to buy an iPhone.
Though he doesn’t have an iPod right now, he thinks an iPhone would give him two devices in one, despite the high price tag. He is seemingly undeterred by the questionable battery life. (One of the reasons why I have a more wait-and-see attitude towards this Apple device.) He isn’t the only one - as the interest in iPhone seems to be on an upswing.
Even if you disregard the rumors and fan sites - the population at large seems to have a considerable interest in the iPhone, indicated by the total search volume for keyword “iPhone.” According to Hitwise, a research group that tracks Internet traffic trends, iPhone related searches represent over 0.002% of total Internet searches per week for past three weeks, with iPhone release date and price being the specific information folks are looking for. (In comparison, MySpace was the #1 query and had 1.16% of the total search volume.) Just as an unscientific indicator the search volume is a good indicator of increasing commercial appeal of the device.
The big question, however, is how does iPhone impact the wireless market at large — and whether it will result in a market share shift, putting AT&T at an advantage.
AT&T is betting big on this device and is hoping to pull ahead of its rivals by riding the iPhone express. AT&T and Apple are going to be launching a big media blitz to promote the iPhone, and according to UBS Research, it will be a major reason why AT&T will be able to add approximately 2.8 million gross postpaid subscribers in the third and fourth quarters of 2007.
If Apple’s guidance of 10 million units in 18 months hits the target, UBS estimates that 2 million iPhones will be sold in the U.S. in the first six months of the launch. That works out to about 18% of AT&T’s post-paid additions and upgrades, UBS estimates. But these 2 million will have to come from somewhere - probably switchers from other wireless services.
At the end of Q1 2007, there were about 170 million postpaid wireless subscribers in the U.S., with Verizon the largest carrier (56 million) with AT&T at #2 with about 51 million, followed by Sprint (41 million) and T-Mobile bringing up the rear at 22 million. (These numbers don’t reflect wholesale and prepaid customers.)
So 2 million units don’t mean much in market share — a little 1.1% market share gain for AT&T in the first six months, but it is the residual impact that might cause the big upheaval in the wireless market.
There are some who believe that since iPhone isn’t going to get as much subsidy as other devices, AT&T can pass those subsidies to even further subsidize non-Apple phones, and making its service more attractive. That would be one way to capture the increased foot traffic to AT&T stores.
Will Verizon and Sprint take this lying down? Of course not, and will launch their own price subsidies, discount plans or whatever it takes to hang on to their subscribers. And whatever happens, consumers will come out ahead — nothing wrong with that. And even if Roy doesn’t end up buying the iPhone, he still might get a good deal somewhere else.
Photos by Niall Kennedy via Flickr.
GSA rings Sprint with bad news
Earlier this week, the US government announced that it had selected three former Bell Companies - AT&T, Qwest and Verizon - to be the only ones who can bid for the individual federal contracts over next ten years. The total value of these contracts will be at least $20 billion, and according to some estimates could be as high as $48 billion.
This is clearly good news for Qwest, the weakest of the three Bells, but it is bad news for Sprint which was amongst the initial bidders but was left out in the end. Sprint’s government business is about a billion dollars. Sprint is going through a tumultuous period and has been one of the big losers in the mobile phone business in recent months.
The contract called Networx Universal (Jeez!) covers individual contracts from 135 agencies. The bidding process cost hundreds of millions of dollars and took the participants nearly four years to get their documents & proposals together.
GSA’s decision is highly curious, and makes us wonder if the US government authorities like GSA even believe in keeping the independent telecoms around, even for the sake of pretension. The Washington Post notes that there will be another smaller contract where smaller companies can participate and will have less rigid conditions. Its not like Sprint doesn’t have experience with working with the government… so what gives? How does Qwest qualify, after all it doesn’t really have any meaningful footprint in government contracts?
“It’s more of an embarrassment than a revenue hit. It’s a total black eye to be completely ignored by the United States government, especially as an incumbent,” said Patrick Comack, an analyst with Zachary Investment Research in Miami. (The Washington Post)
The company is going to be seeking an audience with GSA officials for a debriefing, which is Beltway speak for WTF!
Will Skype save Nokia Internet Tablets?
Nokia’s Internet tablet efforts – the 770, and more recently, the N800 – have produced a mixed bag of results. While the techies have been enthusiastic about the Linux-based tablets, the consumer electronics crowd (and buyers) hasn’t been overwhelmingly enthusiastic.
On Tuesday, some Nokia folks stopped by in our makeshift offices and articulated their vision for the tablet series. The company is betting that as more web services start to support the platform, the devices will gain in popularity. The Finnish phone maker believes that tablets are the next evolution of computing, and as web service matures, these Internet-centric devices will gain more traction.
And one such service is Skype. Nokia is expecting that Skype support will make the device more alluring, especially in the overseas markets.
The Nokia N800 is a nifty looking device that is very capable when it comes to making VoIP phone calls – we use Gizmo client all the time. Google Talk hasn’t exactly become our favorite, but like most we think Skype could actually make us use the device a lot more, especially for quick calls to other Skypers.
“Skype is certainly the most popular,” says Ari Virtanen, Nokia’s vice president of convergence products. Nokia will release in an early beta (without SkypeIn/SkypeOut support) in a few weeks, but the full version of Skype client is expected later this summer, Virtanen says. The Skype support, if nothing else, makes the N800 more attractive to folks who don’t want to lug a laptop along on short day trips.
We see N800 becoming a good way to consume music from subscription services such as Rhapsody and Napster. Nokia folks showed off the Rhapsody service, it was simple, easy to use and music streamed quite nicely over an EVDO-powered Wi-Fi network. Nokia wants to add more such services: Yahoo Music, MSN and Yahoo Messenger amongst others to boost the utility of the device. “It is an Internet services based platform,” says Virtanen.
“The world of computing has gone from mainframes to desktops to now laptops,” says Virtanen, “and the next step is tablets.” That future is going to take a lot longer than either Nokia or anyone else can imagine.
The sales register isn’t exactly jangling with regularity. Nevertheless, Nokia plans to add more retail outlets to its sales channel, especially in the US. Currently the device is sold online, and at Fry’s and CompUSA.
The big boost for N800’s descendants will come when Sprint launches its WiMAX network, sometime in 2008. At higher speeds, most web services are going to become easily accessible, and the N800 type devices will see their utility go up.