Fitch downgrades Sprint Nextel (S)
Fitch Ratings cut its credit rating on Sprint Nextel Corp. on Wednesday following the telecom company's forecast Monday of declining profits in 2007.
Sprint Nextel's gloomy outlook "materially reduced cash flow prospects and was significantly worse than Fitch's expectations," the ratings agency said in a note Wednesday.
Fitch downgraded Sprint Nextel (NYSE: S - News) one notch from BBB+ to BBB, which is two notches above a noninvestment grade, or "junk" rating. Sprint Nextel has about $22 billion in debt.
Sprint Nextel said Monday that it expects operating income before depreciation and amortization between $11 billion and $11.5 billion in 2007, down from a range of $12.6 billion to $12.9 billion in 2006.
The company blamed the drop on lost revenue due to Nextel subscribers who disconnected in 2006 and declining revenue per user.
To regain its competitiveness, Sprint Nextel said it will need to spend an extra $1.1 billion on increased marketing, handset subsidies and network improvements in 2007. That investment "quantifies the depth of the problems that Sprint Nextel faces," Fitch said in its note.
Sprint Nextel also said Monday that it will cut 5,000 jobs, or 8 percent of its work force of 64,600, and implement other initiatives to save $1 billion a year.
Shares of Sprint Nextel plunged 11 percent Tuesday, from $19.64 to $17.45, erasing about $6 billion in market value.
In its note, Fitch agreed with Sprint Nextel CEO Gary Forsee's contention that the company will stop losing customers in the second half of 2007. The company has been besieged by Nextel customer losses because of reduced network quality and subscriber credit issues.
Fitch said it would consider upping its outlook on Sprint Nextel from negative to stable if Sprint Nextel can reverse the negative trends during the next couple of quarters.
Sprint Nextel CFO Paul Saleh said in Monday's conference call that the company was committed to keeping investment grade credit ratings.
Published by the Kansas City Business JournalLabels: S, Sprint Nextel
posted by Stock Administrator @ 10:22 PM
Fitch downgrades Sprint Nextel (S)
Fitch Ratings cut its credit rating on Sprint Nextel Corp. on Wednesday following the telecom company's forecast Monday of declining profits in 2007.
Sprint Nextel's gloomy outlook "materially reduced cash flow prospects and was significantly worse than Fitch's expectations," the ratings agency said in a note Wednesday.
Fitch downgraded Sprint Nextel (NYSE: S - News) one notch from BBB+ to BBB, which is two notches above a noninvestment grade, or "junk" rating. Sprint Nextel has about $22 billion in debt.
Sprint Nextel said Monday that it expects operating income before depreciation and amortization between $11 billion and $11.5 billion in 2007, down from a range of $12.6 billion to $12.9 billion in 2006.
The company blamed the drop on lost revenue due to Nextel subscribers who disconnected in 2006 and declining revenue per user.
To regain its competitiveness, Sprint Nextel said it will need to spend an extra $1.1 billion on increased marketing, handset subsidies and network improvements in 2007. That investment "quantifies the depth of the problems that Sprint Nextel faces," Fitch said in its note.
Sprint Nextel also said Monday that it will cut 5,000 jobs, or 8 percent of its work force of 64,600, and implement other initiatives to save $1 billion a year.
Shares of Sprint Nextel plunged 11 percent Tuesday, from $19.64 to $17.45, erasing about $6 billion in market value.
In its note, Fitch agreed with Sprint Nextel CEO Gary Forsee's contention that the company will stop losing customers in the second half of 2007. The company has been besieged by Nextel customer losses because of reduced network quality and subscriber credit issues.
Fitch said it would consider upping its outlook on Sprint Nextel from negative to stable if Sprint Nextel can reverse the negative trends during the next couple of quarters.
Sprint Nextel CFO Paul Saleh said in Monday's conference call that the company was committed to keeping investment grade credit ratings.
Published by the Kansas City Business Journal
Sprint Nextel's gloomy outlook "materially reduced cash flow prospects and was significantly worse than Fitch's expectations," the ratings agency said in a note Wednesday.
Fitch downgraded Sprint Nextel (NYSE: S - News) one notch from BBB+ to BBB, which is two notches above a noninvestment grade, or "junk" rating. Sprint Nextel has about $22 billion in debt.
Sprint Nextel said Monday that it expects operating income before depreciation and amortization between $11 billion and $11.5 billion in 2007, down from a range of $12.6 billion to $12.9 billion in 2006.
The company blamed the drop on lost revenue due to Nextel subscribers who disconnected in 2006 and declining revenue per user.
To regain its competitiveness, Sprint Nextel said it will need to spend an extra $1.1 billion on increased marketing, handset subsidies and network improvements in 2007. That investment "quantifies the depth of the problems that Sprint Nextel faces," Fitch said in its note.
Sprint Nextel also said Monday that it will cut 5,000 jobs, or 8 percent of its work force of 64,600, and implement other initiatives to save $1 billion a year.
Shares of Sprint Nextel plunged 11 percent Tuesday, from $19.64 to $17.45, erasing about $6 billion in market value.
In its note, Fitch agreed with Sprint Nextel CEO Gary Forsee's contention that the company will stop losing customers in the second half of 2007. The company has been besieged by Nextel customer losses because of reduced network quality and subscriber credit issues.
Fitch said it would consider upping its outlook on Sprint Nextel from negative to stable if Sprint Nextel can reverse the negative trends during the next couple of quarters.
Sprint Nextel CFO Paul Saleh said in Monday's conference call that the company was committed to keeping investment grade credit ratings.
Published by the Kansas City Business Journal
Labels: S, Sprint Nextel
posted by Stock Administrator @ 10:22 PM
0 Comments:
Post a Comment
<< Home