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

Discussion in 'iOS Blog Discussion' started by MacRumors, Oct 26, 2011.

  1. macrumors bot

    MacRumors

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    #1
    [​IMG]


    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.

    [​IMG]


    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.
    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.
    Article Link: Sprint Beats Q3 2011 Estimates, Looks Ahead to iPhone Impact [Updated]
     
  2. macrumors 65816

    kjs862

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    #2
    I'm sure their sales with be a to of higher. I know many people that got the Sprint iPhone.
     
  3. macrumors 6502

    justinfreid

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    #3
    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.
     
  4. macrumors 68020

    Joined:
    May 23, 2011
    #4
    Glad to hear

    And I hope next quarter will be even better. I moved back to Sprint with 4s and very happy with them so far.

    And their LTE ADVANCE network will hopefully be outstanding!
     
  5. macrumors demi-god

    Shrink

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    #5


    Now there's a solid scientific method for making sales projections. :eek: ;) :rolleyes:
     
  6. macrumors 6502a

    Jerome Morrow

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    #6
    Just as good as analyst made one.
     
  7. Moderator emeritus

    mkrishnan

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    Location:
    Grand Rapids, MI, USA
    #7
    Good for Sprint -- I'm not thinking about using them, but even without, a strong Sprint prevents a duopoly crisis with AT&T and Verizon. I'd like to see T-Mobile get a little stronger, too, or else someone else enter the national post-paid market.
     
  8. macrumors member

    FaustsHausUK

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    Chicago, IL
    #8
    With the launch of the 4S, I jumped from AT&T to Sprint and so far, I couldn't be happier.

    I don't care that AT&T offer faster theoretical speeds in Chicago. In reality, I get almost no signal for huge chunks of my daily commute so the consistency of Sprint wins out.

    Hopefully now they have the iPhone, Sprint will see the success they deserve.
     
  9. macrumors G5

    jav6454

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    #9
    Enjoy your 0.15 Mb/s Up/downs
     
  10. macrumors 6502a

    fruitpunch.ben

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    #10
    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?
     
  11. macrumors 6502

    Joined:
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    #11
    How will they be losing 7-8 mil over the next 4 years? You'd think if the iphone would ever pay for itself, it would be at least in the service contracts of the next 4 years. When is the iphone supposed to start paying for itself?
     
  12. Moderator emeritus

    mkrishnan

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    #12
    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...

    [​IMG]

    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.
     
  13. macrumors 6502

    Joined:
    Oct 15, 2010
    #13
    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. :)
     
  14. macrumors G5

    nagromme

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    May 2, 2002
    #14
    Sprint’s numbers sound wrong

    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.
     
  15. Moderator emeritus

    mkrishnan

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    #15
    I thought it was once rumored that Apple negotiated more for their subsidies essentially as a way to give Apple a share of the monthly revenues the phone generates, but I'm not sure this is true. In that case, it might be that the no commitment / unlocked phone is sort of sold at a lower margin by Apple than the subsidized phones, since they wouldn't make up as much as the carrier pays them. But I'm not sure. On the other hand, this reference:

    http://www.wds.co/enlightened/smart...phone_profitability_and_loyalty_wdsglobal.pdf

    Estimates that average subsidy paid to the manufacturer by the provider is $200 for all smartphones, so I too tend to think the math is wrong, and they're paying Apple $400-450, which is $200 (more like 100% more) than other smartphones.

    As for the component of cost, if it's a higher-end Android phone, it's not going to cost dramatically less than an iPhone to make, and might cost more because the manufacturer lacks Apple's pricing agreements with part suppliers.
     
  16. macrumors regular

    RaZaK

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    #16
    Exactly!!!!!!


    I'm switching back to AT&T before my 14 days is up
     
  17. macrumors member

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    #17
    I'm getting 1.25+ and .60 up most of the time.. I sure enjoy it... thanks.

    /b
     
  18. macrumors 68040

    eastercat

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    Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

    It's interesting that since sprint got the iPhone, my friends have been talking about switching to sprint or have already switched.
    Even though the anecdotal evidence isn't scientific, it does indicate a trend that's reflected in sprint's numbers.
     
  19. macrumors 601

    mrgreen4242

    Joined:
    Feb 10, 2004
    #19
    It's all about where you are located. Some places Sprint plenty fast. Others it's not. I just returned (or initiated the return process at least) 3 iPhones to Sprint. Going to switch to ATT next week sometime, once all the return process is finished.
     
  20. macrumors 6502

    Joined:
    Feb 27, 2011
    #20
    I agree, We need to have an organized list of user experienced speeds by city/zip code. I have been looking all over for sprint iPhone speeds in new orleans area. Hell id even take some data on their average 3g speed in the new orleans area, not just 4s info. I know it won't get me the average 6 down and 1.2 up, my local att dsl maxes out at 6/512, so I'm amazed with the 4s HSDPA speeds, but equally amazed at sprints righteous prices. WHO DAT!
     
  21. funkchiro, Oct 26, 2011
    Last edited: Oct 26, 2011

    macrumors newbie

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    Oct 26, 2011
    #21
    Aus store version?

    Error
     
  22. macrumors 6502

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    Aug 17, 2004
    #22
    Will they unlock the iPhone when they go belly-up?
     
  23. macrumors 6502

    Joined:
    Jan 25, 2010
    #23
    I don't know what that CEO is taking for medication, but sounds like a terrible investment strategy. Basically they're forecasting a loss of $8+ billion over 4 years to be able to offer the iPhone. And how do they expect to recoup that in years 5 and beyond? It's not like Sprint's iPhone customers will be more loyal to Sprint than to ATT & Verizon. :rolleyes:
     
  24. macrumors 6502

    Joined:
    Feb 27, 2011
    #24
    I think he's getting his meds from AT&T de la vega. Seriously tho, did they actually attribute the entire 8 billion dollar loss to only the iPhone, I've got to believed they tossed in a nice chunk Of money they'll use to transition to a basic LTE footprint. Also as far as loyalty, your right no more loyal are their customers to them, but I do think a lot of their customers are loyal to the almighty dollar, and therefor will stick with sprint unless someone takes their pricing model. They also, in my opinion after selling phones and service from all carriers for years, at the very least In my area, have a strange almost cult-like following in urban areas and amongst the poorer people, at least in new Orleans. I believe it's because of sprints history of having lower deposits, the whole spending limit works well, and of course the cheaper monthly rates.
     

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