Shares of No. 3 U.S. wireless carrier Sprint-Nextel (NYSE: S) plunged nearly 20 percent Thursday after the company reported dismal second-quarter results and a much larger loss of wireless subscribers than expected.
Sprint finished trading down 82 cents, or 15.9 percent, to 4.34 after falling earlier Thursday to 4.14, the stock's lowest point in five months.
The thing is, when you're the No. 3 wireless carrier in the U.S. market, with about 17 percent market share and facing the prospect of a merger (AT&T's proposed $39 billion purchase of No. 4 T-Mobile USA) that could leave you battling two giants (the second one being Verizon), you can't lose subscribers.
But that's what Sprint did -- 101,000 of them, net. That's down from the 228,000 they lost in last year's second quarter, but far worse than the 15,000-subscriber net loss expected by analysts. With T-Mobile dead in the water until the market knows if the merger will go through, Sprint appears to be blowing an opportunity.
Sprint also reported a net loss of $847 million, way more than the consensus forecast of $530 million in net losses.
Revenue was $8.31 billion, just 4% above last year's Q2 sales. Through the first two quarters, Sprint's revenue of $16.62 billion is just 3% more than in the first half of 2010.
All this made investors distinctly unmoved by Sprint's announcement of a $9-billion spectrum hosting deal wireless wholesaler LightSquared to deliver 4G network service.
With a slowly declining wireless market share, no Apple iPhone (unlike larger competitors Verizon and AT&T) and a possible market consolidation, Sprint's only chance for survival might be leading the charge against the AT&T acquisition of T-Mobile.
CEO Dan Hesse claimed in Thursday's earnings conference call that opposition to the deal is growing.
"Sprint has been the most visible leader of those that oppose the proposed takeover, but opposition is beginning to come from all corners," he said.