Sprint Nextel Corp
(NYSE:S) announced that Dan Hesse would be the company's new chief
executive after Gary Forsee agreed to step down amid shareholder
pressure. The move comes as the telecommunication company is struggling
to regain its foothold and win back market share that it has lost over
the past year. Shareholders are hoping that this could be the change
needed to finally turn around the company's stock.
Dan Hesse has
been serving as chief executive at Embarq, which was spun off from
Sprint not long ago. His performance there and at AT&T earlier drew
applause from Wall Street. Now, many are hoping that the new chief
executive will be able to help the company recover from its failed 2005
merger with Nextel and help the company more effectively compete with
rivals Verizon Wireless and AT&T.
The culture problems at
Sprint Nextel still run deep - the two do not even share a
headquarters! Sprint employees insist that Nextel's poor network
infrastructure was the cause of the recent turmoil while Nextel
employees insist that Sprint is an overly bureaucratic and slow-moving
company that is unable to keep up with the industry trends. It was a
combination of these two combined with a divided workforce that are the
root of the problems today.
One other key issue will by the
so-called WiMax initiative, which has proven to be a cash drain on the
company. The plan involves spending a further $5 billion to build out a
new high-speed wireless network using WiMax technology. The company's
attempt to split the job with Clearwire Corp recently fell through
while the company also rejected a $5 billion injection. This has led
many to believe that the company may be willing to cut back on the
program.
Overall, it will be interesting to see whether ot not
Dan Hesse can integrate these two cultures and turn Sprint Nextel into
a competitor once again. It will also be interesting to see what
becomes of the WiMax initiative that has so many people divided.
Combined, these factors make S a stock
worth watching!
Related CompaniesVerizon Communications (VZ)
AT&T Inc. (T)
Qwest Communications (Q)