Sprint executives said they will talk about the financial hit surrounding the iPhone 4S launch on the company's next earnings conference call. The big question is whether those comments will allay concerns about Sprint's liquidity.
Last night, Sprint CEO Dan Hesse told CNET's Roger Cheng that the plan was to discuss the iPhone 4S on the company's third quarter earnings call. Hesse thought it was premature to discuss the iPhone during the company's strategy day last week.
Oops. Sprint shares got crushed and analysts panned the management.
Sprint Chairman James Hance told Bloomberg that the company goofed by not disclosing the spending on the iPhone 4S launch. Hance also said he has confidence in Hesse and the management team. Hance added Sprint should have disclosed more about Clearwire and the iPhone.
Hindsight is 20/20. In retrospect, Sprint's lack of disclosure created an information vacuum that Wall Street quickly filled. Now there's talk about a liquidity crunch for Sprint, which has to raise cash to pay for a LTE network rollout.
Morgan Stanley analyst Simon Flannery said:
One big omission from the guidance / outlook was the impact from Sprint's iPhone contract. The WSJ reported that Sprint has signed a 4-year $20bn purchase commitment for at least 30.5m devices. Assuming this is true (the company would not comment), then it would have financial and funding implications.
The lack of clarity on Clearwire also didn't help. Wells Fargo analyst Jennifer Fritzsche said in a research note:
While we in no way expected a funding announcement to come for Clearwire last Friday from Sprint given Sprint's own financial position, we expected the company to offer more words of support on the relationship with the strategic partner and lay out a more eloquent solution to its 4G plan.