Sprint (S) Bests EPS Expectations in Q3, Gets Bullish Analyst Comments

Shares of Sprint (NYSE: S) are taking a hit Wednesday following third-quarter results reported ahead of the bell.

Though the Street was expecting a loss of 22 cents per share, Sprint came out swinging with a loss of just 10 cents per share. Revenue for Sprint rose 2.2 percent from $8.152 billion during the same quarter last year to $8.333 billion in the quarter, slightly shy of the $8.38 billion expected.

Analysts comment on the quarter:

• Deutsche Bank notes some key wins for Sprint include wireless service revenue, which came in at $6.9 billion versus Deutsche's $6.8 billion expectation. The firm notes that "upside was primarily driven by post paid
  ARPU of $57.68 (+5.3% YoY) vs. our est of $56.90."
  
  Further, Sprint's wireless EBITDA of $1.21 billion beat Deutsche's outlook for $1.16 billion.
  
  Total net adds of 1.3 million were a huge beat over Deutsche's expectations for 575,000. The firm commented, "upside to net adds was primarily in wholesale/affiliate (835k vs. 250k est) with smaller beats to post paid losses of 44k (-75k est/-15k consensus) and prepaid net adds of 485k (400k est/543k consensus)."
  
  Finally, Deutsche pointed out the only key miss was probably post-paid churn, which, at 1.91 percent, was about 11 basis points higher than Deutsche's 1.80 percent expectation. The firm notes, however, that it doesn't consider this a key miss in the overall strong quarter.
  
  
• Wells Fargo said its numbers will likely need to be revised again, as the firm was positive on Sprint's transparency. Wells Fargo also liked the comments on Clearwire (Nasdaq: CLWR), which the firm expects will strengthen the relationship between the two. Wells Fargo noted Sprint signed a non-binding Memorandum of Understanding which "ensures easy handoffs between networks and lays ''foundation'' for LTE commercial agreement going forward."
  
  Wells highlighted some comments from Sprint's conference call, including:
  • Indicated it has a 4 year agreement with Apple (Nasdaq: AAPL);
    
  • Offered bullish comments regarding ARPU growth in the fourth quarter;
    
  • Now expects 2011 Network Vision costs to be $100 million - $150 million versus. prior guidance of $200 million to $250 million;
    
  • Expanded credit facility by $150 million and amended covenants (to included impact of additional subsidy impact);
    
  • Early iPhone trends very encouraging; with high percentage of new gross adds (vs. just upgrades), but warned it is still early.
    
  • 2013 will be peak year of capital shortfall, but expects 2015 benefits of network vision & iPhones to outweigh costs.

Sprint shares recently came off days' lows, and are now down about about 7.8 percent.

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