iPhone 4S Marks Bold 'Moneyball' Bet for Sprint

From eWeek: Apple has sold some 130 million iPhones worldwide, making it easily the world's single most popular smartphone of its kind. Yet the iPhone, which has brought fortune to AT&T and Verizon Wireless in the United States, could be the device that makes or breaks their rival Sprint).

The No. 3 U.S. wireless carrier began selling the iPhone 4S Oct. 14 for $199.99 on contract. Sprint CEO Dan Hesse said on the company's Q3 earnings call that Sprint sales of the handset brought in the most new subscribers ever for a new smartphone launch after two weeks, topping even that of the Android-based HTC Evo 4G.

Sprint Oct. 26 posted a net loss of $301 million, or 10 cents a share, on sales of $8.33 billion in the third quarter. The good news is it added 1.3 million new subscribers for Q3, doubling its additions from a year ago. Moreover, iPhone 4S, coupled with several solid Android handset launches, should help Sprint pad its additions even more for the holiday quarter.

"We expect iPhone customers to be among our most profitable as the higher upfront acquisition costs are expected to be offset by longer customer tenure and lower support costs, including data efficiency," said Sprint CFO Joseph J. Euteneuer on the company's Q3 earnings call.

And yet Sprint's position feels precarious. The company has roughly half the number of subscribers of both AT&T and Verizon. It is promising its iPhone customers unlimited data, which means potentially bigger strains on its network.

Sprint revealed it has promised to pay Apple $15.5 billion over the next four years for the iPhone. However, the company also needs $7 billion in new financing over the next few years, thanks to its massive iPhone 4S investment and 4G LTE (Long Term Evolution) network upgrade plans.

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