Sprint Nextel (NYSE:S) Chairman James Hance said the company will fix its "mistake" of not revealing to analysts and investors the financial cost of carrying Apple's (NASDAQ:AAPL) iPhone. He said Sprint intends to resolve any uncertainty still lingering from its Oct. 7 investor conference, after which Sprint's stock plunged to its lowest level since February 2009.
Analysts expected Sprint executives to detail the cost of subsidies Sprint will pay to Apple to sell the iPhone 4S, as well as what the impact it might have on the company's network. At the investor conference, Sprint executives said they decided to hold the meeting on Oct. 7 so they could talk about the iPhone 4S, which goes on sale Oct. 14.
"Friday was tough on the stock, tough on everybody in terms of the way it came across," Hance said in an interview with Bloomberg. "It was a mistake not to disclose the impact of the iPhone--a mistake we will fix. We will talk about the impact when we talk about the third-quarter earnings."
Hance said the company's board supports CEO Dan Hesse and Sprint's management team. However, he acknowledged that the company could have done a better job of explaining the costs of the iPhone as well as Sprint's financial commitment to Clearwire (NASDAQ:CLWR), in which Sprint holds a 54 percent ownership stake.
"What we should have done is a better job of disclosing everything financially--iPhone, Clearwire, all the questions hanging out there," Hance said. "I blame us all, frankly," he said, referring to the company and board. "Collectively we missed it."
Sprint executives said at the investor conference that it will deploy LTE on its 1900 MHz spectrum by mid-2012, essentially cutting Clearwire out of its LTE plans, a move that analysts at the conference questioned. Sprint CFO Joe Euteneuer said that Clearwire remains a strategic partner and Sprint will continue to try and help Clearwire going forward, but that no decisions have been made. Hesse noted that Sprint and Clearwire have a $1 billion wholesale relationship that runs through the end of 2012. Hesse also said that if Clearwire ever did face a potential bankruptcy, he would expect Sprint to be involved, but that Sprint does not have insight into Clearwire's finances and that no wireless bankruptcy has ever resulted in customers losing service.
Hance made clear that Clearwire is still important to Sprint. "No question we want them to do well; it's in our interest that they do well," he said. "Nothing good happens in a restructuring and there's nothing good in the outcome of that."
- see this Bloomberg article
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