Shares of Sprint Nextel (NYSE: S), the No. 3 U.S. telecommunications company, jumped as much as 7 percent after the company reported a lower-than-expected first-quarter loss.
By the close, though, Sprint shares fell 4 cents to $2.43, after trading as high as $2.65, up 7 percent, earlier Wednesday.
The Overland Park, Kan., based carrier reported its net loss rose to $863 million, or 29 cents a share, from $439 million, or 15 cents a year earlier. But the loss was 30 percent below analyst estimates.
Sprint also reported continued strong sales of the iPhone products from Apple (Nasdaq: AAPL), the world's most valuable technology company, which started in the fourth quarter.
We continue to our key internal milestones, said CEO Dan Hesse.
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Sprint's wireless unit, also the No. 3 in the sector behind AT&T (NYSE: T) and the Verizon Wireless unit of Verizon Communications (NYSE: VZ), reported selling 1.5 million iPhones, mainly under a $99.99 monthly unlimited calling and data plan. That was more than most analyst estimates.
The last major carrier to sell iPhones, Sprint Nextel last year sold bonds valued at $4 billion followed by another sale of $2 billion in February to help meet upfront costs that range as high as $15.5 billion paid to Apple, as well as other costs to upgrade its network.
Apple CEO Belies Complaints
Apple CEO Tim Cook Tuesday told analysts Apple wouldn't reduce demands that carriers support the iPhone through subsidies.
I think it's important to remember that the subsidy is not large relative to the sum of the monthly payments across a 24-month contract period, Cook said. Cook also said that wireless carriers like Sprint have told me the churn from iPhone customers is the lowest of any phone they sell.
Churn refers to customers that sign up for a contract, then cancel very quickly.
Sprint Wireless reported a total of 56 million subscribers, compared with AT&T's 103.9 million and Verizon Wireless's 93 million, as of March 31.
Like its rivals, Sprint's customers are using more air time to transmit and download data, pushing up average returns per user (ARPU) to $59.88 from $56.17 a year ago and $58.59 in the fourth quarter.
Analysts liked the report and repeated positive ratings. At Wells Fargo, Jennifer Fritzsche reiterated an Outperform rating and said that Sprint could continue to benefit from its ARPU improvement.
At Robert W. Baird, analyst William Power kept his Neutral rating with a price target of $2. He was impressed by the new iPhone additions but said overall Sprint Wireless additions could have been higher.
Meanwhile, Sprint Nextel reported that its cash position strengthened in the quarter. The $7.1 billion on March 31 is nearly twice the amount of the year-earlier's $3.6 billion and 30 percent more than the $3.7 billion reported on Dec. 31.
The company's market capitalization is $7.28 billion.