Sprint Losses $29.5 Billion In Fourth Quarter

Sprint Nextel Corp. (S) reported Thursday a fourth-quarter loss larger than the company's market cap as it wrote off most of the purchase price of its 2005 acquisition of Nextel. The Overland Park, Kan., company also borrowed $2.5 billion to increase financial flexibility, suspended dividend payments and admitted that business conditions are deteriorating, more difficult than expected and unlikely to improve soon.

The news sent Sprint shares down as much as 18% premarket to $7.35, their lowest levels since October 2002. The stock recently traded at $7.88, down 12% from its close Wednesday of $8.95. Sprint, the nation's No. 3 wireless carrier by subscribers, has been losing wireless customers to rivals, while sales have been falling. The Reston, Va., company's problems are said to stem from poor customer service, a reliance on customers who are poor credit risks and a muddled marketing message.

The company's challenges are increasing as its three largest rivals are rolling out plans that charge a flat rate of about $100 for unlimited calling, a significant departure from the traditional model, in which consumers purchase " buckets" of minutes. As a result, Sprint is expected to announce a similar flat rate. Some expected the company to price that rate as low as $60, in order to regain market share. On the company's earnings conference call, Sprint announced a $100 rate for " everything" and $90 plan for voice.

For the quarter ended Dec. 31, Sprint reported a loss of $29.45 billion, or $ 10.36 a share, compared with net income $261 million, or 9 cents a share, a year earlier. Results for Sprint included a $29.7 billion goodwill write-down. money.cnn.com