Sprint Nextel CEO forced out

Sprint Nextel said Monday that CEO Gary Forsee has stepped down as chairman and chief executive officer effective immediately.

(Credit: Sprint Nextel)

Forsee's departure comes as investors, upset over the company's poor performance, have put pressure on the board of directors to make a change at the top.

The company said Chief Financial Officer Paul Saleh will become acting CEO until the board is able to find a replacement for Forsee. And board member James Hance, Jr., will assume the role as a non-executive chairman of the board, the company said.

Board member Irvine Hockaday said the company is focusing its search on candidates outside the company.

"We fully expect that the search will be concluded in a timely manner and we are focused on selecting the right candidate to guide the company to achieve its full potential," Hockaday said in a statement. "Sprint Nextel has the assets, spectrum, customer base and technology to be the leader in wireless mobility services."

In the same press release Sprint also revealed more subscribers losses for the third quarter. The company expects to report that it has lost about 337,000 post paid subscribers when it reports third quarter earnings on November 1. Post paid customers are ones who sign up for annual contracts and are billed monthly. The company also lowered its financial guidance for 2007.

Pressure has been building for months to replace Forsee as investors are becoming increasingly more agitated at Sprint's poor performance. Since Sprint acquired Nextel in 2005, making it the third largest cell phone provider in the U.S., the company's stock has declined roughly 27 percent.

Last week, activist investor Ralph Whitworth, who owns about 2 percent of Sprint's outstanding stock, told the Wall Street Journal that he had lost confidence in Forsee and expected to board to take action.

Among Whitworth's biggest concerns is Sprint's focus on building a next generation wireless network using a technology called WiMax. The company has committed itself to spending $5 billion by 2010 to build the network. Whitworth is concerned the company is not focusing enough on its core cell phone business, which has been steadily losing customers over the past few quarters.

Earlier this year, Sprint signed a deal to partner with a company called Clearwire to bring WiMax to even more cities. The two companies predict that together, by the end of 2008, they will offer mobile WiMax network access to about 100 million people.

How the management change will impact the nationwide WiMax network is still uncertain. But it's certainly possible that a new CEO could significantly scale back the aggressive plans.

A Sprint representative was unavailable for comment.

EarthLink, which is also struggling to sign up new customers for its Internet services, had a change of heart with regard to its Wi-Fi network plans when a new CEO came on board and assessed the situation.

I'll be taking a closer look at this issue in a follow-up story. So stay tuned.

[MyRightEye]

The danger of ignorant shareholders

Here examples the danger of share holders that have the brawn but
no brains. Ralph Whitworth thinks things stand still in the hi-tech
arena obviously if he thinks the core cell phone business is what
there focus should be. The iPhone should tell him a thing or two,
but clearly he's blind to progress. WiMax could well be Sprint's
savior, and if Ralph Whitworth has his way, Sprint will soon be a
memory.

[lamarguy91]

It's about time

It's absolutely ridiculous that it took this long, but I guess everyone deserves a turn to guide thier own future.

First they let go of Len Lauer, COO.
Then Cindy Rock, Senior VP of Customer Care.

All the while Gary was taking on more responsibility and driving the company in the wrong direction.

It's sad that it took 2+ years, five thousand plus layoffs, and a 25% drop in stock price before they finally made the right decision. This is the type of poor corporatology that continues to hinder companies that could be so much more than they are.

Absolute power corrupts absolutely. At least there was a way to make the necessary change.d

[problemfree]

subscriber loss

Maybe sprint should focus on customer service and extending their existing network instead of all of the dropped calls of late and lack of service.

[Zaunto]

Direction

As an information technologist, I can appreciate the desire of a company to create innovation by implementing new technologies they think customers will want, however it's a question of priorities. Right now, Sprint Nextel has some serious issues that the implementation of new technologies that require time to bring to market, won't resolve right now. While it is possible that WiMax may move Sprint Nextel forward in the future and eventually turn a profit, the problem is that, for the last two years, they have been losing customers and therefore, lost revenue. Shareholders of public companies are interested in progress and turning a profit. Clearly, since the merger with Nextel, Sprint has been under performing. Under those circumstances, it's only a matter of time before the CEO is replaced and a new one takes the reigns and charts a direction to bring the company back to profitability. It's very possible that the new CEO won't think spending 5billion on WiMax will bring customers back to Sprint Nextel or help it turn a profit right now, because that won't fix what's broken with the company. Customers didn't leave Sprint Nextel because it didn't have WiMax. They left for legitimate reasons related to customer service and other issues that WiMax won't fix. While there are certainly those who believe that the implementation of WiMax may bring the company back to profitability and perhaps a leadership position in the wireless industry, others will do the math and see that spending 5 billion dollars to implement a new and unproven technology isn't going to resolve the issues that got Sprint Nextel to the point of losing customers and money- Awful customer service and service plans and products that aren't compelling enough to keep customers on board. Where do you think the customers are going?
To a service provider who has WiMax. No. They're going to service providers who provide better customer service and products that the customer wants now, particularly better call quality and fewer dropped calls. I doubt very seriously that anyone left Sprint to run to AT&T to get an iPhone, however if they did, I can assure you that after their iPhone got inadvertently bricked with the latest Apple update, they likely moved on to another provider. The question that should be asked is, who is the wireless leader and why? What are they doing that has them leading the industry? I guarantee you it has nothing to do with WiMax.

[Dr_b_]

WiMax is a great idea but...

But... it's still Sprint, so i doubt i'd consider using it because of the problems Sprint has with charging to much and bad service.

On the voice side, what were they thinking buying Nextel, which was a decent company that they absolutely destroyed?

I wouldn't scrap wimax, like the previous posters suggest needs to happen. But I would agree they need better phones and better customer and network service now, before the voice world slowly but inexorably evolves into a data world.

Gary is out because of the rot within, not just because he was a bad leader.

[i_am_still_wade]

Sprint can't do 1G right

Everywhere I turn, I see Sprint ads. This tells me that they are losing customers so much that they must advertise more to make them up. And when I talk to current Sprint subscribers, my suspicion is confirmed. They complain of dropped calls, rude customer service, and nickel-and-dime fees. I complain I can't get through. Every time I call a friend who has a Nextel, the phone rings three times and goes to voicemail. He usually calls me right back, and I asked "where you using the phone, did you hear it ring?" And he always said no.

Sprint, you have to crawl before you walk. If you can't do 1G, then I know you won't be able to do 3G or any G.