Best Buy and Radio Shack Impact on Sprint Results

Implications: Sprint Nextel’s 2nd quarter loss of 776,000 postpaid subs questions Best Buy’s record sales of the Samsung Instinct from Sprint while Radio Shack reports disappointment with Sprint compared to AT&T.

Analysis:

Sprint Nextel’s CEO tried to counter the 2^nd quarter 776,000 subscriber loss with statements about the positive impact of the Simply Everything plans, the Now Network campaign, and the Samsung Instinct $130 price point.  But Best Buy and Radio Shack differ about Sprint mobile sales.  In early July, Best Buy had pitched the record sales of the Samsung Instinct at the $130 price point and the appeal of the Sprint Simply Everything plan for voice and unlimited data.  In comparison, Radio Shack at its 2^nd quarter presentation expressed disappointment about Sprint and complemented the strength of AT&T.  Perhaps, during this third quarter Radio Shack will realize the effects of Sprint’s price cutting.  Or the difference could be that Best Buy is advertising the Samsung Instinct on the front page of its Sunday newspaper inserts whereas Radio Shack does not show the Instinct.  Radio Shack appears to be focused on phones under $100 and promotes its four alternatives for prepaid services.  Sprint’s CEO commented at the 2^nd quarter results about the “company-wide retention efforts” and the importance of retaining versus adding customers.  Sprint’s commitment from distribution channels, such as Radio Shack selling both AT&T and Sprint, could impact the retention efforts for the second half of 2008.