Sprint reported second-quarter results today that fell way below expectations, and said it will lay off 2,000 employees as it tries to bring costs under control.
The third-largest carrier reported an operating loss of $192 million, or 19 cents a share, which was far worse than what analysts had been expecting. It was anticipated that Sprint would report a loss of about 6 cents a share on $8.59 billion in revenue, according to Thomas Reuters estimates.
The company’s revenues were roughly in-line with expectations, totaling $8.5 billion.
As part of the restructuring the company is undertaking, it announced today it was cutting 2,000 positions, which will result in a cost savings of $400 million on an annualized basis.
For now, Sprint continues to be larger than T-Mobile, which is vying to overtake Sprint as the third-largest U.S. carrier. At the end of the quarter, Sprint had 55 million subscribers compared to T-Mobile’s 52.9 million.
Sprint added 590,000 net additions during the second quarter, with postpaid phone gross additions growing 37 percent month-over-month in September and increasing year-over-year for the first time in 2014. Additionally, Sprint celebrated postpaid phone net losses slowing by nearly 60 percent in September.
However, any inroads the company made were clearly in the back-half of the quarter since phone losses totaled 500,000 during the period and other device losses sank by 33,000. Most of its growth came from postpaid tablet net additions, which totaled 261,000. For comparison, T-Mobile’s net additions during its third quarter totaled 2.3 million.
“While we are pleased to see customers respond to our new value proposition, we must continue to take bold actions to reach our goal of returning to growth in postpaid phone customers,” said Marcelo Claure, who was appointed to president and CEO in mid-August. “By improving our competitive position and driving costs out of the business, we plan to deliver long-term value creation.”
Sprint had been interested in acquiring T-Mobile this year, but the company gave up those aspirations in August, when the former CEO Dan Hesse left the company and Claure took over. Sprint is now taking drastic measures, including upgrading its network and offering discounted rate plans to lure back unhappy customers.
The company says it has initiated a “transformation plan” to address these issues. In addition to offering cheap rate plans and rebuilding its network, it’s also making cost cuts (including layoffs), and will seek to grow its management team, by focusing on internal and external candidates, including talent from SoftBank, one of its major owners.
“We have started a transformational journey,” Claure said. “While the company continues to face headwinds, we have begun the first phase of our plan and are encouraged with the early results. Every day we are focused on improving our standing with consumers, improving our network and controlling our costs.”
In after hours trading, Sprint’s shares sank nearly 4 percent, or 25 cents, to $5.95 a share.