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Profits Down At Sprint Nextel, But Future Is Bright

Sprint and Nextel paid the price of their marriage as the combined company said its fourth quarter net income fell 55 percent. However, Sprint Nextel said the merger was working well and was attracting new users at a healthy rate.

In reporting its fourth quarter financial results Wednesday, the firm said its fourth quarter net income was $197 million as opposed to $437 million the two companies reported for the same period in the previous year.

The company said its revenue increased to $11.3 billion in the quarter, representing a 7 percent gain over the previous quarter. Sprint Nextel said about 2 million net customers were added in the recent quarter and company executives pointed to the low defection rate of 2.1 percent as evidence that the merger was working well.

Looking ahead, the company noted that it expects to spin off its local landline unit and concentrate primarily on its wireless operation.

Sprint Nextel is the third-largest mobile phone service provider in the U.S. behind Cingular Wireless and Verizon Wireless.