Sprint Nextel Corp., a global communication services company, announced a lower than expected net profit for the second quarter of 2006.
The Virginia-based company had recently acquired Nextel along with other smaller companies to solidify its foothold in the U.S. cellular phone market. The lower than expected net profit, decreased 40 percent to $370 million this quarter compared to a profit of $600 million in the same quarter last year. Revenues however grew by 10 percent to $10 billion from previous year.
â€œIn the second quarter, our distinctive asset mix again produced consolidated revenue growth that exceeded rates posted by the other larger cap telecom service providers,â€ said Gary Forsee, the firmâ€™s president and CEO.
The lower than expected fall in profit was due to the merger costs associated with acquiring Nextel in October 2004. The full year merger and integration cost for the quarter was expected to reach around $600 million. In addition, more than half of its 708,000 customers came from â€˜prepaid contractâ€™, which were not as profitable as long term customers.
Despite the problems, Forsee announced a share buyback program.
â€œReflecting our â€¦ confidence in our future, (the) Board of Directors has authorized common stock purchases through the open market of up to $6 billion over the next 18 months,â€ Forsee said.