Sprint is essentially divided into two divisions, each with its own stock. The FON Group is the company’s core landline phone business, and the PCS Group is its wireless division. Sprint separated the two units in the late 1990s to capitalize on high-growth wireless stocks.
Under the terms of the deal, Sprint will issue half a FON share for each of the approximately 1 billion PCS shares outstanding, and pay a $0.12 dividend to all its outstanding shareholders.
Last month, the operator posted flat profit for 2003 after its wireless unit widened its year-end loss. For the year ended December 31, it posted net income of $1.21bn, up from $630m in 2002. Revenue remained flat at $26.19bn, from $26.67bn in 2002.
For the year, Sprint’s FON long-distance unit posted an encouraging 55.3% rise in net income to $1.87bn, from $1.2bn in 2002. Sales however declined 6.8% to $14.18bn from $15.22bn in 2002, which Sprint blamed on the competitive market and lackluster customer demand.
The operator’s wireless operation, the PCS Group, posted a larger net loss of $322m compared to a net loss of $255m in 2002. Sales did rise 8.4% however to $3.30bn from $3.05bn in 2002.
Last November, the Overland Park, Kansas-based company announced that it was axing about 2,000 employees as a result of its restructuring and cost-cutting measures, that were designed to reduce operating expenses by 5% to 7% over the next three years to combat ongoing pressure on margins.
As part of this plan, an additional 5,000 to 6,000 jobs at Sprint will be outsourced to IBM Global Services.
This article is based on material originally published by ComputerWire
