Sprint Through the Finish Line: At a Loss

The article I am referring to is one dealing with Sprints widening loss over the last year. The ironic thing about it is that Sprint is increasing its loss by selling more iPhones. All of the 3 big wireless providers (Verizon, AT&T and Sprint) purchase their iPhone supplies from Apple via Cupertino, California. However, the money that they are paying for the phones is actually more than they are able to sell the phones for, theoretically. The reason for this is so that people will purchase multi-year plans as well as keeping loyal customers on board. If they were to not supply the iPhone, many customers would probably  venture to new providers that did supply the iPhone. So while Sprint is keeping its customers happy by providing the iPhone, they are actually experiencing a net loss of $1.9 billion dollars, or .45 cents a share. This was expanded from the previous year. Another reason for Sprint's addition of supplying the iPhone was in attempt to cover from 5 years of losses. So while they are reporting an increase in total customer gains (or subscriber gains), they are still selling the iPhones at a loss, which can make me think that while they are clearly trying to increase their customer base and recover from previous losses in the present, they are looking more toward the future where they will already have a large customer base and will hopefully be able to start selling the iPhones at a profit. Interesting situation that a company would literally dig the hole deeper, not knowing 100% if they will be able to start filling the hole up again in the near future.


Article Link:  http://www.businessweek.com/news/2012-02-08/sprint-loss-widens-after-iphone-demand-boosts-subsidy-costs.html