Long-distance carrier and wireless service provider Sprint Corp. lowered its guidance for its long-distance business unit's fourth-quarter performance on Tuesday.
Sprint lowered its revenue estimates for its FON Group -- the local and long-distance business division of the company -- to around US$4 billion, compared to its previous estimates of $4.1 billion to $4.2 billion for the fourth quarter. Sprint attributed the shortfall in the quarter to network-services revenue growth at the low end of Sprint's previous guidance and product-distribution revenues below earlier estimates.
Sprint's profit estimates for the FON remained stable at $0.31 to $0.33 per share.
The company said it will cost slightly less to end its ION initiative than the $2 billion it planned charge against fourth-quarter earnings. ION -- or Integrated On-demand Network -- was meant to provide subscribers with voice, fax and data services simultaneously over a single line. Sprint ended the billion-dollar experiment in October after failing to sign up enough customers to justify the expense during an economic slowdown.
Unexpectedly slow holiday sales shaved subscriber growth for Sprint's cellular phone service, the company said. Sprint's flow of brand new customers increased 18 percent over the same quarter a year earlier. This figure does not take into account customer turnover, which remained in line with Sprint's previous expectations of 3 percent. However, Sprint expects EBITDA -- earnings before interest, taxes, depreciation and amortization -- to be around $1.5 billion for its PCS Group wireless division, compared to its earlier estimate of $1.6 billion.
Sprint attributed lower pretax earnings to increased spending on marketing and other operating expenses and lower wholesale margins.
The company plans to announce its financial performance for the fourth quarter of 2001 on Feb. 4, after the close of New York's financial markets.