Can Sprint Come Back?

In an article published last night on the Wall Street Journal online, the CEO position, currently held by Dan Hesse, at the SprintNextel Corp. was discussed in great detail. Hesse has been the CEO of Sprint for the last five years and every year under Hesse, Sprint has reported a loss. Now although this may sound terrible, Hesse was able to bring the company back from near the point of a bankruptcy after a Sprint merger with Nextel turned out terribly for the company (from which the company is still trying to recover).

Recently, the board and its director, Jim Hance, has been playing a more active role to help the company recover from some poor choices, not all necessarily made by Hesse. But the suspicious level of acitivity by the board may be a signal to investors that the board is concerned that Hesse is not the right man for the CEO position. Right now, Sprint has invested $15.5 billion to make Apple's iPhone available to customers on the Sprint network. The company also plans to spend billions on a new high speed network. So far this year, an acquisition of MetroPCS Communications was rejected by the board, and talks with Deutsche Telekom to share network space with T-Mobile went nowhere. In addition, hedge-fund manager David Einhorn and other large investors shared their concerns that Mr. Hesse is no longer capable of performing his duties as CEO. They believe that he is focusing too much on the public relations view of the company rather than actually focusing on the long term operations of the company.

Since Hesse was hired as CEO five years ago, Hesse has helped bring back customers and raise revenue. He has made many tough choices including spending billions on building a fourth generation network called LTE and bringing the iPhone to Sprint. But Sprint has yet to make a profit during Hesse's tenure really raising the question: Is he the right guy?

Sprint is interesting to me, not only because it is headquartered in my hometown of Overland Park, KS and has a huge effect on the local economy, but also because it reminds me of what we discussed today in class. Much like RIM, Sprint encountered a disruptive change with the release of the iPhone. When Apple released the iPhone exclusively on the AT&T network, Sprint found many of its customers leaving for the other network so they could get the iPhone. Currently, Sprint is the third largest wireless carrier behind AT&T and Verizon Wireless. Sprint was lucky earlier this year when $39.9 billion AT&T takeover of T-Mobile was opposed due to regulatory restrictions. Hesse was very vocal in his opposition to the deal and was clearly part of the reason why the acquisition never went through. With Sprint's stock at under $3/share, the question is now being heard more loudly than ever by the board. Is Dan Hesse the right man for the job? What can Sprint do to turn the tide and start making profit again? What is the plan of action by the Sprint board?