“It’s January, and at Sprint Nextel, that means layoff time. In each of the past two years, the No. 3 U.S. wireless service provider kicked off the new year with an announcement that thousands of jobs would be eliminated,” Olga Kharif reports for BusinessWeek.
“This year is no exception. On Jan. 26, Sprint said it will eliminate as many as 8,000 employees,” Kharif reports. “Investors welcomed the announcement, boosting the shares 2% to 2.51 on the news.”
“But some analysts say there may be little reason in the long run to revel in this latest attempt to reduce expenses,” Kharif reports. “In spite of about 9,000 jobs eliminated in the previous two years, the company has suffered losses in four of the past five quarters and margins have been narrowing. ‘Cost-cutting measures like this are akin to a tourniquet,’ says Craig Moffett, an analyst at Sanford C. Bernstein & Co. ‘They can help stave the bleeding, but they can’t save the patient.”
Kharif reports, “Handing out pink slips may help reduce costs—Sprint will cut expenses by $1.2 billion a year in this recent round of cuts—but the moves aren’t doing too much to address the company’s biggest challenge: keeping subscribers from disconnecting service and switching to rivals… AT&T, for instance, is the exclusive U.S. provider of the Apple (AAPL) iPhone. To its credit, Sprint has snagged an exclusive on the much anticipated Palm Pre. But the 3.1-inch touchscreen phone isn’t expected to hit stores until May.”
MacDailyNews Take: The more we hear of Palm’s Pre, the more we believe it’s nothing more than takeover bait that also just might happen to contain some measure of Apple’s patented intellectual property. We wouldn’t be that surprised if Palm’s Pre never hit stores. See:
• Apple awarded huge ‘multi-touch’ patent covering iPhone, iPod touch – January 26, 2009
• Palm shares drop on worries of Apple legal fight – January 22, 2009
• Apple COO Tim Cook puts Palm, others on notice: ‘We will not stand for having our IP ripped off’ – January 21, 2009
Kharif continues, “Fortunately for Sprint Nextel, the company has plenty of cash—about $4.1 billion at the end of the third quarter—and isn’t expected to face a cash crunch imminently. But big debt eventually will come due, and investors’ patience may wear thin even sooner.”
Full article here.