Fitch downgrades Sprint Nextel |
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Published
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Thu, 11 Jan 2007 00:11
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CHICAGO (AFX) - Fitch Ratings said Wednesday it downgraded its ratings for Sprint Nextel Corp. and its subsidiaries due to the company's lowered 2007 guidance.Fitch downgraded its rating to 'BBB' from 'BBB+' and affirmed the commercial paper rating of 'F2'. About $22 billion of debt is affected. Fitch also said its outlook for the company is negative.Fitch said Sprint's revisions to its 2007 estimates reduced cash flow prospects and was 'significantly worse' than the rating firm's expectations.The company reduced its revenue estimates for 2007 on Monday and said it would have to cut 5,000 jobs. The news brought stocks down more than 10 percent Tuesday.'Fitch remains particularly concerned about the erosion that's occurring in the Nextel operations due to network capacity and quality issues, branding weaknesses and past reliance on subprime subscriber additions,' the firm said. 'The $1.1 billion Sprint Nextel will spend in an attempt to reinvigorate growth in the business quantifies the depth of the problems that Sprint Nextel faces.'Sprint Nextel shares rose 40 cents, or 2.3 percent, to close at $17.85 on the New York Stock Exchange.Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Sprint Nextel struggling since merger 