Reuters

(Reuters)

Sprint Shares Tumble on iPhone Cost Fears

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Sprint Nextel <S.N> shares fell as much as 17 percent on Tuesday as investors worried about the cost of selling the Apple Inc <AAPL.O> iPhone on top of its plans to upgrade its network and its debt obligations.

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The decline followed a 10 percent dive in Sprint's stock on Monday after a Wall Street Journal report that the money-losing company will have to pay Apple $20 billion over the next four years and will lose money on the iPhone until 2014.

"This is a huge gamble for Sprint and people are justifiably worried that they won't be able to make any money doing it. It's not a company that's in great financial shape right now," said Stifel Nicolaus analyst Chris King.

Concerns about Sprint also dragged down Clearwire Corp <CLWR.O>, which is majority-owned by Sprint. Clearwire, which needs billions of dollars in funding to finish building its own network, saw its shares fall 4 percent to $3.32 on Nasdaq.

Worry about Sprint may put Clearwire's "viability into question, especially if you thought Sprint was going to wind up buying them," King said.

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The Journal story, which cited unnamed sources, said Sprint has committed to buy 30.5 million iPhones from Apple in the next four years.

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Sprint shares recovered slightly but were still down 9 percent at $2.48 in late-morning trading on the New York Stock Exchange. They touched a low of $2.25 earlier.

(Reporting by Sinead Carew; editing by John Wallace)