Image source: Sprint
Sprint reported results for the fourth quarter of fiscal year 2014 last week. The telecommunications network missed analyst expectations, and share prices have fallen more than 7% since the report.
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But the numbers rarely tell the whole story. A few of Sprint's top-level executives used a conference call with analysts to expand on the report and answer Wall Street's most burning questions. Here are five of the most important tidbits they shared, and I'll even help you figure out what the Sprint people actually meant.
The main focus right now Let's start right at the top. Here's how Sprint CEO Marcelo Claure describes his primary task these days:
That's absolutely the correct reaction to a quarter of disappointing churn numbers. Listen to customers, improve the service, try to win back the lost subscribers by earning their business.
How is that effort working out?
Putting Sprint's numbers into perspective It looks like Sprint is onto something with this new-found focus on good customer service. Comparing Sprint's quarter to the figures presented by Verizon , AT&T , and T-Mobile , Claure didn't have to bend over backwards to find a positive spin:
For your reference, here are the graphs Claure is talking about:
"Top left," or industry trends in retail net adds. Image source: Sprint
"Top right," or industry trends in postpaid net addsImage source: Sprint
Network quality improvements To explain how Sprint's improving network quality is keeping subscribers in the fold, Claure turned to network performance surveys by market analysis firm RootMetrics:
In other words, nobody consistently leads the wireless pack in every market, despite some claims to that effect. And Sprint is happy to notch a few wins and generally improved scores at this point, because anything is better than coming up in last place everywhere.
Here's what RootScore had to say about Sprint's improving quality on a metro-market level:
Asset management These network improvements are expected to cost Sprint a cool $5 billion in capital expenses this year. Management is pulling out all the stops to make sure the company can afford these crucial investments, said Sprint CFOJoe Euteneuer:
In short, Sprint is not worried about debt repayments in the short term and has access to a plethora of financing options. From revolving credit lines and special-purpose loans to potential stock offerings and dipping into big daddy SoftBank's deep pockets, Sprint reserves the right to consider all of them.
Speaking of expenses: Is the RadioShack bankruptcy buyout helping? When RadioShack went belly up, the bankruptcy process sold most of the retail chain's assets to largest shareholder Standard General. That hedge-fund firm then turned around and agreed to let Sprint build a store-within-a-store in about 1,750 RadioShack outlets.
No money appears to have changed hands between Sprint and Standard General, but the company is hiring up to 2,600 full-time retail workers to manage the RadioShack stores. Nearly tripling your retail footprint doesn't come cheap, even if the storefronts themselves were added for a song.
So, what will the co-branded RadioShack stores do for Sprint?Marcelo Claure said:
To summarize, Claure doesn't expect much from these stores -- but the low cost of operating them may make it worth his while anyhow.
The best-case scenario is that Sprint adds foot traffic to RadioShack stores, which then helps the struggling retail chain bounce back and give Sprint more than just a larger retail presence. This ideal case is a virtuous circle, but it will take both marketing finesse and firm execution from both partners.
Otherwise, those 2,000 new Sprint employees will find themselves back on the street again as the company cuts loose from a failed retail experiment.
The final plot, of course, will fall somewhere in between these extremes. Sprint investors should keep a close eye on this project. It's a risky bet that could truly could be a game-changer under the right circumstances.
The article 5 Things Sprint Corp.'s Management Wants You to Know originally appeared on Fool.com.
Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Apple and Verizon Communications. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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