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