Sprint Beats Q3 2011 Estimates, Looks Ahead to iPhone Impact [Updated]

by

Sprint today announced financial results for the third quarter of 2011, and while the carrier did not begin offering the iPhone until after the quarter ended, it was still able to beat analyst estimates and report a smaller-than-expected loss. Perhaps most significantly, Sprint reported a net gain of 1.3 million subscribers during the third quarter, the carrier's best performance in over five years.

sprint logo
Sprint also took the opportunity to tout the iPhone in its press release, citing the device's record-breaking launch and the expectation that iPhone customers will be among the carrier's most profitable.

Growth in Sprint brand net additions was achieved without the benefit of Apple’s iPhone 4S and iPhone 4, which launched Oct. 14. The launch of this iconic device resulted in Sprint’s best ever day of sales in retail, web and telesales for a device family in Sprint history. The response to this device by current and new customers has surpassed initial expectations. The iPhone is expected to be accretive for Sprint, and iPhone users are expected to be among Sprint’s most profitable customers.

Overall, Sprint reported a loss of $301 million for the third quarter, down from a $911 million loss in the year-ago quarter. The carrier is said to have committed to purchase over 30 million iPhones over the next four years, with the upfront costs potentially resulting in Sprint taking an initial hit to its financial numbers. But with Sprint expecting strong profits from iPhone service contracts, the carrier anticipates that the iPhone will be a strong contributor to improved financial performance over time as it recoups its initial outlay.

Update: Sprint CEO Dan Hesse reported to Reuters that Sprint will need $7 billion in new financing over the next few years in order to support the iPhone commitment and the network transition to LTE.

Sprint said that while the iPhone would cost the company $15 billion in the next four years, it would generate $7 billion to $8 billion in projected future value for Sprint over that period.

Sprint said it will pay Apple an iPhone subsidy that is 40 percent higher, or $200 more per device, than the subsidies it pays for other phones.

But the company's executives said it should be worth the extra cost as the device is bringing in new customers.

"IPhone has an expensive contract but is worth every penny," Hesse said.

Top Rated Comments

justinfreid Avatar
121 months ago
Dollars in, dollars out

Apple's iPhone business model makes it so it's nearly minting money in Cupertino. Seeing the short term financial impact on Sprint of selling the iPhone, comprised of around $550 payments right to Apple for every contract a customer signs, indicates the strong pent up demand for the iPhone on different carriers and that the carriers are still willing to pay that upfront premium to sign up new data users. Apple gets cash stuffed into both pockets.
Kudos to Peter Oppenheimer, Apple's CFO.
Score: 3 Votes (Like | Disagree)
mkrishnan Avatar
121 months ago

How does that work? So they're going to lose 7-8 billion dollars from the iPhone? Sounds like a great way to run a business! Or do they mean it will generate 7-8 billion MORE than the 15 it cost?

C|Net offers more detailed analysis here:

http://news.cnet.com/8301-1035_3-20125836-94/sprint-finally-opens-up-on-iphone-4g-plans/

If this inline works...



They are projecting that they will lose money on the iPhone through 2014 and then start making money on it in 2015. Basically, because iPhone users have traditionally been lower turnover and higher revenue (albeit with fewer carrier options in the past), they "should" be able to make money on them in the long term.
Score: 2 Votes (Like | Disagree)
Shrink Avatar
121 months ago

I'm sure their sales with be a to of higher. I know many people that got the Sprint iPhone.



Now there's a solid scientific method for making sales projections. :eek: ;) :rolleyes:
Score: 2 Votes (Like | Disagree)
briankwest77 Avatar
121 months ago

Enjoy your 0.15 Mb/s Up/downs


I'm getting 1.25+ and .60 up most of the time.. I sure enjoy it... thanks.

/b
Score: 1 Votes (Like | Disagree)
nagromme Avatar
121 months ago
Sprint’s numbers sound wrong

Sprint said it will pay Apple an iPhone subsidy that is 40 percent higher, or $200 more per device, than the subsidies it pays for other phones.

Napkin math:

If $200 is 40% more than other phones, that would mean those other phones (many not even smartphones?) get a $500 subsidy each, and the iPhone gets $700. Those numbers sound way too high to me:

* iPhone unlocked prices (4 and 4S) range from $549 to $849.

* iPhone subsidized prices range from $99 to $399.

* So if Apple charges the carriers the full retail unlocked price, minus what the consumer pays up front, then the carrier’s cost would be $450 per iPhone, across the range.

* But in fact, with a mass commitment like this, Sprint probably doesn’t pay full retail price. (Maybe it varies per model.) It’s got to average somewhere less than $450 per iPhone, right?

Yet Sprint says they pay $500 for non-iPhones (including non-smartphones?) on average, and $700 per iPhone?

For that matter, do those other phone makers have a full $200 of extra margin they can give up to the carrier, vs. what Apple gives? Or do their phones cost $200 less to make? (Maybe so, if many aren't smartphones?) All the numbers sound too high to me.

What am I missing? Sprint’s statement does say “pay Apple,” so they’re not factoring in infrastructure, advertising, or other costs when they’re talking about 40% = $200 more.

Just curious.
Score: 1 Votes (Like | Disagree)
blue22 Avatar
121 months ago
Sprint thus far has been great...

Sprint's 3G network is a slightly slower than AT&T's for sure, but it's not that big of a deal in the grand scheme of things.

Overall the network is more consistent and offers better value (unlimited data plan, and free night & weekends starting at 7pm) for similarly priced plans so I'm certain this is going to help Sprint make money/profit off the iPhone in the long run despite their initial upfront commitment. And so far, I've been completely satisfied with their service & network on my iPhone 4S (and I use the web a lot too on the phone) so zero complaints here. :)
Score: 1 Votes (Like | Disagree)

Top Stories

magsafecasedangle

Apple Elaborates on Potential for iPhone 12 and MagSafe Accessories to Interfere With Implantable Medical Devices

Saturday January 23, 2021 2:42 pm PST by
Since the launch of iPhone 12 models in October, Apple has acknowledged that the devices may cause electromagnetic interference with medical devices like pacemakers and defibrillators, but the company has now shared additional information. Apple added the following paragraph to a related support document today:Medical devices such as implanted pacemakers and defibrillators might contain...
Top Stories 44 Feature

Top Stories: 'Thinner and Lighter' MacBook Air, Smaller iPhone 13 Notch, iOS 14.4 Incoming

Saturday January 23, 2021 6:00 am PST by
We continued to hear a lot more about Apple's plans for its Mac lineup this week, including word of a high-end redesigned MacBook Air and the return of an SD card slot as part of the upcoming MacBook Pro redesign. It also sounds like Apple has been working on Face ID for Mac, but it won't be appearing in a redesigned iMac this year as originally planned. This week also saw rumors about the...
bloodoxygenapplewatch

Apple Watch Series 7 Rumored to Feature Blood Glucose Monitoring

Monday January 25, 2021 5:05 am PST by
The Apple Watch Series 7 will reportedly feature blood glucose monitoring via an optical sensor, according to ETNews. The report, which mainly focuses on the blood glucose capabilities of the Samsung Galaxy Watch 4, explains that Apple is intending to bring blood glucose monitoring to the upcoming Apple Watch Series 7 using a non-invasive optical sensor. Measuring blood glucose levels,...
maxresdefault

Microsoft Touts Surface Pro 7 as 'The Better Choice' Over MacBook Pro in New Ad

Saturday January 23, 2021 11:02 am PST by
Microsoft yesterday shared a new ad on YouTube titled "Microsoft Surface Pro 7: The Better Choice," in which the company compares its tablet computer to Apple's 13-inch M1 MacBook Pro, as spotted by MSPoweruser. The ad highlights the Surface Pro 7's touchscreen and included stylus as opposed to only a "little bar" (the Touch Bar) on the MacBook Pro. Other advantages of the Surface Pro 7...
airpods galaxy buds comparison

Samsung Galaxy Buds Pro vs. Apple AirPods Pro

Friday January 22, 2021 2:34 pm PST by
Samsung in January unveiled new flagship Galaxy S21 smartphones and alongside the new phones, introduced the $200 Galaxy Buds Pro, which are priced at $199 and offer Active Noise Cancellation. Subscribe to the MacRumors YouTube channel for more videos. These new Galaxy Buds Pro are clearly designed to compete with Apple's AirPods Pro, so we thought we'd compare the two sets of earbuds in our...
2021 mbp sd slot feature2

Bloomberg: Next MacBook Pro to Feature SD Card Reader

Friday January 22, 2021 7:50 am PST by
Last week, reputable analyst Ming-Chi Kuo outlined his expectations for new 14-inch and 16-inch MacBook Pro models later this year, including the return of the MagSafe charging connector, the removal of the Touch Bar, a new flat-edged design, and the return of more ports built into the notebooks for expanded connectivity. A concept of a modern MacBook Pro with an SD card reader Kuo did not...
time to walk apple watch

Apple Fitness+ Feature 'Time to Walk' Launching Soon With Audio Stories From Special Guests

Saturday January 23, 2021 7:13 pm PST by
Earlier this week, Apple seeded the watchOS 7.3 Release Candidate, which is typically the final beta version of a software update. The release notes for the update list a new "Time to Walk" feature for Apple Fitness+ subscribers, described as "an audio experience in the Workout app where guests share inspiring stories as you walk." Apple Fitness+ subscribers will be able to open the Workout...
Flat MacBook Air Feature

Bloomberg: Apple Working on 'Thinner and Lighter' High-End MacBook Air With MagSafe, Could Launch in Second Half of 2021

Friday January 22, 2021 3:34 am PST by
Apple is working on a "thinner and lighter" version of the MacBook Air that the company plans to release during the second half of this year at the earliest or in 2022, according to a new report by well-connected Bloomberg journalist Mark Gurman. It will include Apple's MagSafe charging technology and a next-generation version of the company's in-house Mac processors. Apple has discussed...
q4 2020 mac growth feature

Mac Sales Skyrocketing After M1 Launch

Tuesday January 19, 2021 3:00 am PST by
Apple's worldwide Mac shipments grew massively in the fourth quarter of 2020 after the launch of three new Macs with the M1 chip, according to new PC shipping estimates shared by Gartner. Apple shipped an estimated 6.9 million Macs, up from the 5.25 million it shipped at the same time in 2019, marking significant growth of 31.3 percent. In spite of the growth of Mac sales, Apple remained...
apple time to walk apple watch airpods 01252021 inline

Apple's New 'Time to Walk' Feature Launches Today for Fitness+ Subscribers

Monday January 25, 2021 6:30 am PST by
Apple today officially introduced Time to Walk, a new feature for Apple Fitness+ subscribers with audio stories from influential people that Apple Watch users can listen to with AirPods or other wireless headphones while walking. Time to Walk episodes will be automatically downloaded to the Apple Watch with a Fitness+ subscription, and users can start an episode directly from the Workout...