Sprint said to heart iPhone - and then some
Massive.
That's the only way to describe the $20 billion that Sprint Nextel Corp. is reported to have committed to pay to buy more than 30 million iPhones over the next four years. The Wall Street Journal's online edition Monday quoted unnamed sources who spilled the beans one day before a big Apple press conference Tuesday where the company is expected to announce the iPhone 5.
Until now, the iPhone has been exclusive to AT&T Inc. and Verizon Wireless. But Sprint apparently is willing to pay a price to join the list of iPhone resellers - and it's a steep price. CEO Dan Hesse reportedly informed his board that the deal wouldn't start returning a profit until 2014. (Cynics out there may be excused for noting that Sprint has finished in the red each quarter since 2007 so what's the difference?)
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Fair enough, but the strategy driving this decision recognizes that the current trend lines need to get redrawn or there will be serious problems for Sprint, which is the nation's third-largest wireless carriers. It is losing subscribers to the two bigger wireless companies - in no small part because it hasn't been able to sell the iPhone. (According to the WSJ report, the chance to sell the iPhone was described in board discussions as a make-or-break proposition.)
If the WSJ report turns out to be true, Sprint shareholders would be excused for wondering whether management has set too optimistic a goal. But as was
Come Tuesday, we'll know for sure.