An analyst report saying that Sprint Nextel will have higher churn than expected in the first quarter of 2009 sent the company's stock price plummeting.
Wachovia Capital Markets analyst Jennifer Fritzsche downgraded Sprint to "market perform" from "outperform" because of fears of higher churn. She projected first quarter churn to be between 2.1 and 2.3 percent, above the consensus estimate of 2.16 percent. Sprint's churn in the fourth quarter of 2008 was 2.16 percent, compared to 2.15 percent in the third quarter and 2.29 percent in the year-ago quarter.
Sprint's stock closed on Monday at $3.57, down 57 cents, or 13.8 percent. Fritzche said that Sprint continues to lose subscribers on its iDEN network, many of whom have been affected more adversely by the economic recession than other Sprint customers. The note said that Sprint's current stock price took into account that Sprint had started offering new flat-rate Nextel Direct Connect plans, was cutting costs and its highly anticipated launch of the Palm Pre will occur in the second quarter.
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