Another industry has been burned by dipping into the subprime well. 

Sprint Nextel reported a $29.4 billion fourth-quarter loss last week, or $10.36 a share, a huge drop from the $261 million (9 cents a share) it reported for the fourth quarter in 2006. Much of the loss — $29.7 billion — was attributed to a one-time write down related to Sprint’s merger with Nextel Communications in 2005, an incompatible marriage that has caused huge customer defections.

The company projects a loss of about 1.2 million customers this quarter, about the same number it lost during 2007. CEO Daniel R. Hesse told the Washington Post that some of its customers quit the wireless carrier because they can’t afford to pay their bills.

Sprint changed its credit requirements last summer to draw customers with poor or little credit histories. Consequently, Hesse told the Post, the company picked up a lot of subprime customers and took a bigger hit in this area than other wireless carriers. 

With the mortgage industry still reeling from losses incurred by subprime loans, why would any company court these customers?  Apparently, to gain new subscribers.  Sprint ended 2007 with 53.8 million customers, 700,000 more than it reported in 2006. 

No one in the industry envies Hesse. He took over in December and has doled out strong medicine in a bid to improve the company’s fortunes, eliminating 4,000 jobs, dismissing three senior executives and moving the corporate headquarters from Reston to Overland, Kan. In addition, Sprint has suspended the payment of dividends.  But taking on subprime customers?  Seems like a strange way to “sprint ahead.”