Big day for Sprint shareholders! Before the bell on Tuesday, for the first time in three years, Sprint Corporation (NYSE:$S) swung to a quarterly profit. Not only that but the company’s chief executive said that an announcement on merger talks should come in the “near future”. As a result, shares increased more than 6%.
As we speak, Sprint, the number four wireless carrier in the United States, is exploring its options, including a merger with T-Mobile and a tie-up with Charter Communications (NASDAQ:$CHTR).
To top it off, the company is in the midst of carrying out a turnaround plan. The Overland Park, Kansas-based company is looking to strengthen its balance sheet in order to compete in a saturated market for wireless service.
Despite cutting costs, analysts still believe that Sprint is highly leveraged. Even though its customer base has expanded – thanks to Chief Executive Marcelo Claure – growth has been driven by discounting.
Let’s take a look at the numbers!
Sprint announced that it cut its costs of services and selling, general, and administrative expenses by roughly $370 million in the second quarter. Additionally, the company said it expects another $1.3 billion to $1.5 billion of year-over-year reductions in fiscal 2017.
Further, Sprint reported net income of $206 million (5 cents per share) in Q1, which ended on June 30. This is compared to a loss of $302 million (8 cents per share) in 2016. Net operating revenue hit $8.16 billion, which is up from $8.01 billion. On average, analysts had forecast a net loss of 1 cent per share on revenue of $8.11 billion, according to Thomson Reuters.
Last but not least, Sprint added 88,000 subscribers who pay a monthly phone bill in the second quarter. This is compared to 173,000 net additions in the 2016 period.
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