Sprint (S) Disappoints On Earnings | Declines Ahead!

Sprint Corp (NYSE: S)

Sprint is seeing massive declines in pre-market trading this morning, insinuating that today is going to be a rough day on the stock and its investors. As expected, S released its earnings report today before the opening bell. However, what was released in the report was anything but expected. Unfortunately, the company missed expectations with regard to revenue and earnings. Today, we’ll take a look at the earnings report, discuss the pressure being put on the stock and talk about what we can expect to see from Sprint moving forward.

Sprint’s Q2 Earnings: A Cause For Concern

As mentioned above, Sprint missed expectations in Q2 for both revenue and earnings. Unfortunately, the company is facing incredible competition leading to lack luster growth. Here’s what we saw from the earnings report earlier today:

  • EPS – As expected by analysts, Sprint produced a loss in the second fiscal quarter. However, the size of the loss was wider than expected. While analysts called for a loss of $0.09, the company actually reported a loss of $0.15 per share.
  • Revenue – Another miss for Sprint was revenue. Unfortunately, this figure has been slipping for some time now. This quarter, the company reported revenue at $7.98 billion, down from $8.03 billion and missing analyst projections of $8.12 billion.

The Biggest Problem Sprint Faces At The Moment

Unfortunately for Sprint (and other cell phone service providers), the landscape in the industry is changing. In the past, Sprint, AT&T, and few other companies dominated the sector. As a result, they were able to charge more for services, lock customers into contracts and more. However, that is no longer the case. As time passes, we’re seeing more and more discount cell phone service providers like Metro PCS, Wal-Mart Family Mobile, and others cutting the cost of cell phone service dramatically. This is ultimately causing the average price of cell phone service to decline while forcing Sprint and other companies to step up their game with regard to the services they provide.

How The Market Reacted To The News

We are still in pre-market at the moment. However, Sprint investors have already shown that they are unhappy with the results. Currently (8:51), S is trading at $4.46 per share after a pre-market loss of 8.43%. Unfortunately, it doesn’t seem as though today is going to end much better given the circumstances leading up to the declines.

What We Can Expect To See Moving Forward

Moving forward, Sprint is headed for a bit of a headache, however, the game isn’t over for the company just yet. I believe that in the short term, we can expect to see more declines. However, in the earnings report, we also learned positive news. For example, the company is cutting expenses by about $2 billion – a massive cut that’s likely to prove to be fruitful. In the long run, I’m expecting to see positive news from the stock.

What Do You Think?

Where do you think S is headed and why? Let us know in the comments below!

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