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

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

  1. MacRumors macrumors bot


    Apr 12, 2001

    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 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. kjs862 macrumors 65816


    Jan 21, 2004
    I'm sure their sales with be a to of higher. I know many people that got the Sprint iPhone.
  3. justinfreid macrumors 6502


    Nov 24, 2009
    NEW Jersey / USA
    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. Tiger8 macrumors 68020

    May 23, 2011
    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. Shrink macrumors G3


    Feb 26, 2011
    New England, USA

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

    Jerome Morrow

    Jun 13, 2011
    United Kingdom
    Just as good as analyst made one.
  7. mkrishnan Moderator emeritus


    Jan 9, 2004
    Grand Rapids, MI, USA
    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. FaustsHausUK macrumors member


    Mar 11, 2010
    Chicago, IL
    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. jav6454 macrumors P6


    Nov 14, 2007
    1 Geostationary Tower Plaza
    Enjoy your 0.15 Mb/s Up/downs
  10. fruitpunch.ben macrumors 6502a


    Sep 16, 2008
    Surrey, BC
    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. wiz329 macrumors 6502a

    Apr 19, 2010
    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. mkrishnan Moderator emeritus


    Jan 9, 2004
    Grand Rapids, MI, USA
    C|Net offers more detailed analysis here:


    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.
  13. blue22 macrumors 6502a


    Oct 15, 2010
    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. nagromme macrumors G5


    May 2, 2002
    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. mkrishnan Moderator emeritus


    Jan 9, 2004
    Grand Rapids, MI, USA
    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:


    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. RaZaK macrumors regular


    Jul 13, 2008

    I'm switching back to AT&T before my 14 days is up
  17. briankwest77 macrumors member

    Feb 26, 2010
    I'm getting 1.25+ and .60 up most of the time.. I sure enjoy it... thanks.

  18. eastercat macrumors 68040


    Mar 3, 2008
    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. mrgreen4242 macrumors 601


    Feb 10, 2004
    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. PPFee macrumors 6502

    Feb 27, 2011
    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

    funkchiro macrumors newbie

    Oct 26, 2011
  22. The Past macrumors 6502

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

    Jan 25, 2010
    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. PPFee macrumors 6502

    Feb 27, 2011
    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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