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Top message:  Goodbye, Nextel... by Amarantamin   Oct 27, 2010, 2:07 PM

Replying to:  Not Profitable? by jrfdsf   Nov 6, 2010, 5:10 PM

Re: Not Profitable?

by cellphonesaretools    Nov 11, 2010, 12:19 PM

jrfdsf said: "Not only was Nextel a profitable company pre-merger, it had the highest ARPU of any in the wireless industry."

Which is exactly correct and to which I would add:

Nextel had even higher "ARPE" average revenue per EMPLOYEE than any other US wireless provider. In 2004 Nextel generated gross revenue of $13.4 billion with approx 19,000 employees, while Sprint Wireless generated gross revenue of $14.6 billion with approx 30,000 employees. Thus in 2004 Nextel grossed 44% more per employee compared to Sprint (using Sprint's numbers as the baseline). Put another way, (using Nextel's numbers as the baseline), Sprint was 31% less efficient than Nextel was.

In a nutshell, Nextel had less than 2/3 the number of customers as Sprint, less than 2/3 the number of employees, yet NEXTEL GENERATED TWICE THE PROFIT of Sprint, on 8% less gross income, with less than half the customer churn (Nextel was at 1.2% churn, Sprint was at 2.6% churn). No matter how you choose to do the math, Nextel's performance was SIGNIFICANTLY better than Sprint's was on all fronts, pre-merger.

In case anyone tries to flap their gums again and say that Nextel wasn't profitable, here are the actual numbers, quoting 2004 annual reports by both companies:

Wireless division customers:
Nextel = 16 million
Sprint = 25 million

Wireless division gross revenues:
Nextel = $13.4 billion
Sprint = 14.6 billion

Operating income:
Nextel = $3.0 billion
Sprint = $1.5 billion

Employees:
Nextel = 19,000
Sprint = 30,000 (60,000 incl wireline)

As incontrovertible proof, here are the links to each company's annual reports:

NEXTEL:
http://phx.corporate-ir.net/phoenix.zhtml?c=63347&p= ... »

SPRINT:
http://investors.sprint.com/phoenix.zhtml?c=127149&p ... »

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