Sprint downturn puts WiMAX plans in doubt

A drop in earnings has put the WiMAX plans of US carrier Sprint Nextel into further doubt, as the company continues its search for a new leader.

On Thursday, the operator reported a 77 per cent drop in third quarter net income from $279m a year ago to $64m this year. Consolidated net operating revenues also fell to $10bn, compared to $10.5bn in the year ago third quarter.

The decline is fuelling further doubts on the future of Sprint’s WiMAX network, being built in conjunction with Clearwire.

Last month, chief executive and chairman, Gary Forsee stepped down from his post under pressure over Sprint’s performance. Forsee’s departure comes in the wake of shareholder discord as Sprint fails to keep up with rivals Verizon Wireless and AT&T in terms of subscriber growth, following the 2005 merger of Sprint and Nextel.

During the third quarter this year, the company reported a net decline of 60,000 wireless subscribers. Results include growth from CDMA post-paid, Boost Unlimited, wholesale and affiliate channels but these gains were offset by declines from iDEN post paid and Boost pre paid.

With the search for a new CEO underway, CFO Paul Saleh is serving as acting CEO.

The WiMAX question is further compounded by the fact that rebel shareholder Ralph Whitworth has been building his stock pile and is seeking a seat on Sprint’s board. Although Sprint has become something of champion of for the wireless broadband technology, Whitworth is publicly opposed to Sprint’s fascination with WiMAX and has said it detracts from the operator’s core business.

The company’s third quarter results could give Whitworth further ammunition to fuel his campaign. During the third quarter, the carrier noted capital investments of $73m related to the WiMAX initiative and wireless capital spending is expected to increase significantly in the fourth quarter.