NEW YORK — Sprint Nextel Corp. said Thursday it might have to write off all of the $30.7-billion (U.S.) goodwill value from its purchase of Nextel Communications and smaller deals as it struggles with customer losses.
The No. 3 U.S. mobile service provider said in a regulatory filing that it found in an annual goodwill review that its mobile unit's net book value exceeded fair value.
Sprint said that would result in an impairment charge that could represent “a substantial portion or potentially all” of the $30.7-billion goodwill on its balance sheet.
The exact size of the impairment charge is to be determined and will be disclosed in Sprint's fourth-quarter results report due on February 28.
Sprint said the charge will not affect its cash balance or future cash flows, nor will it result in any violation of debt covenants.
“We're sound financially,” spokesman James Fisher said. “We've good cash liquidity.”
Sprint shares, which had fallen the week before, rose more than 2 per cent on Thursday. The news did not make a big impression on investors, who had already deemed Sprint's 2005 purchase of Nextel Communications a failure, analysts said.
“Given the way the company has performed post that acquisition, it's not surprising,” said Pacific Crest analyst Steve Clement. “I think this is virtually meaningless for the stock.”
Sprint has had trouble retaining customers in recent years as it struggled to integrate the $35 billion Nextel deal. It also has had network and customer service problems.
The company also bought several affiliates to overcome legal disputes related to the Nextel deal.
Sprint recently appointed Dan Hesse as chief executive, replacing Gary Forsee, who left last year. Its Chief Financial Officer Paul Saleh and two other senior executives left last week, Sprint shares, which have fallen almost 60 per cent since the Nextel purchase, were up 2 per cent at $10.57 on the New York Stock Exchange Thursday, in line with shares of other wireless stocks such as Leap Wireless and MetroPCS.
