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Sprint Corporation Reports Mixed 1Q15 Earnings

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Stock misses revenue estimates, beats EPS

On August 4, 2015, Sprint Corporation (S) announced its 1Q15 earnings, reporting operating revenues of $8.02 billion in comparison to analyst estimates of $8.32 billion. Revenues declined 8.75% year-over-year (or YoY) in comparison to $8.78 billion reported in 1Q14. The service segment reported revenues of $7.03 billion, and revenues from the equipment segment were $990 million for 1Q15. In comparison to 1Q14, the service segment generated revenues of $7.68 billion and equipment segment revenues were $1.1 billion.

In comparison, peer companies like AT&T (T), Verizon (VZ), and T-Mobile (TMUS) reported revenues of $18.3 billion, $22.6 billion, and $8.2 billion, respectively, in the quarter ended June 30, 2015.

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Operating income for 1Q15 was $501 million in comparison to $519 million in 1Q14. Net income, however, declined to -$20 million in comparison to net income of $23 million in 1Q14. Sprint Corporation reported earnings per share (or EPS) of -$0.01, beating analyst estimates of -$0.07 per share. The company’s EPS in 1Q14 was $0.01 in 1Q14.

Low operating expense

Sprint Corporation reported a net loss of $20 million in comparison to estimates of $169.3 million due to a reduction in operating expenses. Operating expenses for the firm were $7.52 billion for 1Q15 in comparison to $8.27 billion in 1Q14, a decrease of 9.33% on a YoY basis.

In 4Q14, ending March 31, 2015, Sprint missed revenues and EPS estimates. It reported earnings of $8.28 billion missing estimates by 2.06% and an EPS of -$0.06 in comparison to an estimate of -$0.058.

After the declaration of its 1Q15 results, Sprint was trading 4.78% higher on August 4, at $3.35.

Management changes

On August 3, 2015, Sprint announced major changes in its executive management team as the firm appointed a new CEO and CFO to improve operations. The firm believes this change in management will transform the company into a new generation network operator.

Sprint (S) comprises 3.90% of the iShares US Telecommunications ETF (IYZ) and 0.03% of the iShares Russell 1000 Value ETF (IWD).

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