Sprint Nextel to cut 4,000 jobs as customers flee

NEW YORK -- The reduction is the first of what is expected to be a series of moves by the new CEO, Dan Hesse, as he tries to save the troubled wireless carrier. Last January Sprint announced it was cutting 5,000 jobs. The company currently has 60,000 employees.

Most shocking to Wall Street, however, was the scale of customer losses, also announced Friday: 885,000 during the fourth quarter alone.

Most of the losses came from the Nextel side of the company, says Jan Dawson, an analyst with Ovum. In its news release, Sprint did not break down the customer losses by brand.

Sprint said it lost 683,000 "post-paid," or subscription customers, and 202,000 pre-paid customers during the quarter, which is traditionally the strongest for cellphone carriers.

Last year Sprint lost 1.2 million customers. "It's going to be worse in 2008," predicts UBS analyst John Hodulik.

Sprint's "churn" — shorthand for the number of people who drop off each month — was also ugly: 2.3%. Verizon's churn is almost half that, 1.2%; AT&T isn't far behind.

Hodulik's assessment: "Sprint is losing market share, to put it mildly."

As for those 4,000 job cuts, "It's a good start." Hodulik predicts that more cuts would be needed.

Instead, Sprint stumbled as it tried to blend the starkly different cultures of the two companies while trying to reconcile their incompatible wireless technologies.

Sprint wound up alienating customers, who bolted by the thousands. Sprint's dismal performance eventually cost Forsee his job. Hesse, a former AT&T executive with long ties to wireless, was recruited from a Sprint spinoff, Embarq, to replace him.