The nation's third-largest wireless carrier announced significant workforce cuts of 4,000 jobs, almost 7 percent of its 60,000 staff, and the closing of 125 retail stores, 8 percent of its 1,400 locations. Sprint Nextel said that the aggressive measures will help it trim labor costs by $700 million to $800 million a year. The company is struggling to compete with the larger AT&T Inc. and Verizon Wireless.

Upon the announcement, Sprint Nextel shares fell almost three dollars, or 25 percent. The plunge also hit rivals AT&T and Verizon, but to a lesser degree. Sprint announced that it had a net loss of 638,000 contract customers in the fourth quarter, a severe drop which is about double what was expected by analysts. Overall, Sprint has 53.8 million subscribers.

"It's certainly a competitive industry right now and results haven't been in line with expectations," Sprint spokesman Rich Pesce said. "We're definitely confident that this is a step in the right direction to turn things around."

Last month, Sprint hired Daniel R. Hesse as its new chief executive officer. He was the chief executive of Embarq Corporation, a local-phone spinoff of Sprint. The main problem is that Sprint Nextel has not managed to put out a consistent market strategy.

While Verizon boasted its network's quality with advertisements that include the catchphrase “Can you hear me now?” and AT&T managed to snatch the exclusive deal with Apple's iPhone, Sprint just appeared to stall.

Last month, MySpace and Sprint Nextel Corp made public their plans to join forces in order to launch a unique service in the first quarter of 2008. When the plan will be put into practice, Sprint will become the first U.S. wireless carrier linked to the free MySpace mobile Website. The project will most likely be a successful one as Fox Interactive Media, the developer of MySpace, has had several collaborations with Sprint since 2002.

After the project is implemented, the Sprint customers with enabled phones will have direct access to MySpace, without additional charge.