Can Sprint be saved?

Can Sprint be saved?

Summary: You're a potential CEO of Sprint Nextel. You're interviewing with the recruiters and whether you get the job or not depends on one question: What would you do with Sprint Nextel?

SHARE:

You're a potential CEO of Sprint Nextel. You're interviewing with the recruiters and whether you get the job or not depends on one question: What would you do with Sprint Nextel?

The question is a tough one. Would you keep former Sprint CEO Gary Forsee's big WiMax plan? Some analysts are already reminding Sprint management that they are just placeholders. And since they are placeholders they should shelve the WiMax rollout until the new person comes in. Do you cut capital spending? Do you divest Nextel? What about the high wireless churn rates? Can you improve customer service? How do you convince people your network is up to snuff? What's the time frame?

All of these questions bounce around as I peruse Sprint's third quarter earnings report. The company reported third quarter net income of $64 million, or 2 cents a share, compared to $279 million, or 9 cents a share a year ago. Adjusted earnings, which exclude charges and other costs, were 23 cents a share. That tally was a penny above estimates. And that's where the good news ended more or less. Revenue in the quarter was down 4 percent from a year ago to $10 billion.

More alarming is that Sprint lost 60,000 total wireless subscribers in the third quarter. Churn was 2.3 percent "on seasonally higher involuntary deactivations and competitive market conditions." Translation: Churn was up because Sprint customers bailed and the company booted some customers it deemed too costly.

Acting Sprint CEO Paul Saleh said in a statement that the company is trying to simplify its business and improve customer service. Capital spending was $1.7 billion, which was lower than Cowen & Co. estimates of $2.3 billion. This is largely due to timing shifts in Sprint's WiMax buildout.

But let's face it. Sprint's future isn't Saleh's call. In fact, he's a lame duck. Sprint's technology guru told Information Week that it's full steam ahead on WiMax. But then again the CTO may be a lame duck too. There's no guarantee that the new CEO will see WiMax as a wireless utopia.

All of this leaves that initial question: What would you do to fix Sprint?

A few thoughts for discussion:

Don't shelve the WiMax plan. Patrick Comack, an analyst at Zachary Investment Research and Management, says in a research note that the company's WiMax rollout should be shelved. He argues that the new CEO should put WiMax on "long-term hold." Sure, WiMax will cost a bundle, but Sprint's partnership with Clearwire mitigates that risk a bit. I'd maintain that the WiMax network should proceed. Here's why: Sprint's network stinks. Customers know it and are leaving to go to Verizon Wireless and AT&T. Given the networks at AT&T and Verizon aren't going to crumble, Sprint needs to at least attempt a leapfrog. WiMax could be that leapfrog move.

Innovate. Sprint better move heaven and earth to partner with Google on its mobile plans. With smaller carriers, the hip factor is huge. Sprint has lost its mojo relative to T-Mobile. Meanwhile, handset makers don't have any huge incentives to create exclusives with Sprint anymore. Palm's Centro is exclusive to Sprint in a partnership of two limping companies.

Divest Nextel. Sprint's acquisition of Nextel seemed like an OK deal at the time. But the company got more complicated with two networks and two customer bases. And probably two IT infrastructures that may only be halfway integrated.

Improve customer service. Good luck with this one, but the new CEO has to give it a shot. Take Sprint back to basics. The problem with this obvious fix is that it will take years to remedy. No amount of marketing will make customers feel good about Sprint in short order.

Find the one thing you do best and stick with it. What's Sprint's calling card? Is it data, voice, cool phones or some other niche. Sprint doesn't seem to know. It better find out. If not the new CEOs job description will be to stop the bleeding and dress the pig up for a sale.

Topics: Wi-Fi, CXO, Mobility, Networking, Telcos

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

10 comments
Log in or register to join the discussion
  • Companies which merge...

    ... pay a large consolation to the CEO whose job disappears, if not to the others laid off. Even a profitable company like Gillette is vulnerable to huge CEO payoffs.

    If Sprint is not going to have an excuse to provide the CEO the hundreds of millions annually he deserves (if I understand Mr. Reich correctly) then it will be sold. Assuming any other company is willing to buy it in return for not having to win customers with (briefly) lower charges.

    So I suggeste watching the amount promised the new CEO. If it seems reasonable and commensurate with the company's condition and prospects, expect the sale to occur within the year. If, on the contrary, the CEO can make a fortune on an increase in the stock price, expects years of massive layoffs before the sale.

    Some companies exist to provide massive payments to their CEOs, and Sprint is likely in that position.
    Anton Philidor
  • Best option

    Find a Buyer to takeover and solve all the problems eluded too.
    jfp
  • Wow Larry.. you need to try researching facts

    "Sprint?s network stinks. Customers know it and are leaving to go to Verizon Wireless and AT&T."

    No... Back in the 90s I switched carriers quite a bit before settling happy into Sprint.. The reason.. Sprint has the largest network and still does... Back when AT&T and Cingular and T-Mobile were dropping calls left and right, Sprint had the most reliable network in the country... The only reason that the other players have decent coverage today is because they lease Sprint lines...

    All Sprint has to do to beat the competition is stop leasing lines. The AT&T and the rest would be back to the same crappy coverage they had in the late 90s. Ever see that Sprint commercial with Ron Livingston (fairly recent) where he has the lawyer behind him and the lawyer is there to correct him if he makes a false claim.. he states that sprint has the largest network.. period... And that still remains true today.

    The only reason I left Sprint was because of the iPhone.. My sprint coverage was still better than AT&Ts coverage today. Before the iPhone, the only thing I cared about in a cell phone was call quality and battery life. At&T is adequate coverage for now... But if Sprint stops leasing them lines, and that quality goes back to the way it was, you can bet I will unloack my iPhone and switch back to Sprint in a mere matter of seconds. I really wish Sprint had gotten the iPhone instead of AT&T... But oh well, we can't always get what we want.
    i8thecat
    • Available phone selection

      That's been my issue with Sprint, even though I'm still a customer. They do have great coverage, but the in-store phone selection sucks compared to other companies. The phones they offer at good prices simply don't compare to the other company offerings - not to mention iPhone. They should aggressively partner with Google and get rebuild some "flash" in their image.
      Spats30
  • I would love to see a company create a wireless IP network

    They could deliver phone, network, tv, music, etc wherever they wanted. The devices wouldnt use closed technology to deploy existing equipment and possibly use that equipment at home, work, road.

    Yes other providers already do this.. but you have to use their manufacturer of choice.. no more gsm or cdma or 3g.. a nationwide wireless IP network would crush the competitions proprietary network.

    Right now, i dont like sprint... their sprint phone services sucks, nextels network sucks, wireless internet sucks... and most importantly their customer service sucks(ranks one notch below at&t though). They have fallen behind and your right.. they need to leapfrog.
    Been_Done_Before
  • RE: Can Sprint be saved?

    I disagree that the network sucks and the handset selection isn't that good. I've had Sprint for 10 years and I've had very good service compared to my friends with other carriers. And the wireless data network -- with its EVDO Rev A coverage and service -- is supposed to be tops in speed and coverage, according to most tech blogs. Verizon is known for having a poor selection of phones historically, though they may be catching up.

    To turn it around, I'd say mash with Google as much as possible (if you haven't noticed, the Google name is magic), go full-steam ahead on WiMax because it sets them apart from major competitors, and fix customer service by fixing the computer systems the reps have to work with when they help customers (seems to be the biggest part of the issue).

    Customer service is getting better under some new execs in that area, so keep it going. If things aren't much better a year from now, I'd say look go with a much larger player in the industry and open yourself up to the highest bidder. With all that spectrum, all those cell sites, millions of customers and many other great assets, many companies will come calling.
    RaymondJones
    • Can Sprint Be Saved!

      You are correct 100% percent. Sprint should stay on course. They just need a scapegoat in every industry and Sprint is it for the cell phone industry! I am impressed with my IC902 phone ( She freezes up every now and then, but so do some of the competitions phones too...)
      willzee1
  • RE: Can Sprint be saved?

    I've been a Sprint customer over this same period of time, maybe longer. I have often thought about changing; and it may happen this time when the contracts expire on all 3 of our corporate phones.

    I view Sprints coverage as about the same, more or less, as any other carrier; they all equally about as bad and have issues somewhere and sometime.

    Sprint's customer service is generally very poor. If you call abut a new phone and how its feature(s) integrate with your current services you will likely get misinformation. I shudder whenever I've had to touch my service plan; they have a 100% success ratio of screwing it up, requiring multiple phone calls to resolve it and undo it.

    The last such event involved their Business Connect Services and the PPC6800 PDA phone. Sales was clueless and sent me to Tech support whom assured me that the PPC 6800 would work with Business Connect, just as the PPC6700 does.

    We ordered it, got it in, thankfully hadn't activated it and found not even Tech support at teh pre-sales point knew what they were talking about, since they were not going to support this phone under Business Connect. They did issue an RMA and a pickup ticket which took another hour of time, but when the next billing came in they didn't give a credit for the entire transaction, which took another hour getting resolved.

    This is typical of Sprint, the only thing they've got going in their defense is that it appears none of the rest of the carriers are any better.

    I would agree that Sprints phone selection is about as bad as it gets as well, especially for business use, when Blackberry and Treo chiclet small screen form factors are unacceptable choices.

    My sole use for this phone is for business purposes, requiring a PDA phone using Window Mobile, any of the "entertainment" uses for us are a waste of time and money and therefore worthless "features"

    Frankly, Sprint is not alone; the whole industry is generally dismal in this regard.

    My 2 cents worth.
    cef1000@...
  • Sprint products!

    I have to admit that some of the other cell phone companies have better phones than Sprint. Now the 64 thousand dollar question is? Are they more productive than a Nextel or a powersource phone. I doubt they are on a scale of 9 out of 10 - Sprints phones do what the other cell phone companies phone do plus more. Now you have to let the readers here answer that question too...I understand that they have problems with coverage but who out of the big five cell phone companies doesn't. Another thing - can you make a phone call with the handset shut with Verizon, T mobile, AT&T or any other company - no. Is any bodys push to talk service superior to Nextel - no. Does any of those other companies meet the needs of business customers better than the service Nextel offers - They can compete with something comparable but Nextel's is far superior to any of those other companies. Now you see Nextel phones do far more than those competing services. Go buy a Nextel and one of those other phones and read both of their manuals and your jaw will drop to the floor, when you see that Nextel's do more. Poor road runner would have to find a job because he would of either fallen off the cliff or be left in the dust fooling around with those other companies. The problem with Sprint is that they SHOULD BRAG ABOUT THEIR CAPABILITIES EVERY NOW AND THEN, then they might be a competing or (formidable company) Oh I'm sorry I was thinking about the election. So before you think that Sprint should sell it's self or die as a company it has a thing or two up it's sleeve too. And Lastly, CEO Ivan Seidenberg of Verizon Communications says, "If you think cellular coverage will be available every where, you've got to be crazy." Meaning coverage all over America! I wouldn't sell my self to any body and stay on course with wimax and the marriage of their push-to-talk service in all their Sprint phones!
    willzee1
  • RE: Can Sprint be saved?

    yes sprint can be saved, what sprint needs is to stop and really look at what its customers are calling about, first of all the billing, it's just a mess. simply put keep it simple stupid. Sprints Quality of service, in other words don't expect to get better service if you don't get better people. train , eliminate red tape and empower your employees to make decisions based on how best to serve the customer. give the customer more respect!!! first of all if you advertise a special price on line for new customers make that same offer available to your current customer. give back to those loyal customers that have been with us, loyalty and longevity go hand and hand. third strive for getting customers issue resolved , start by spot checking retail locations making sure they are truly taking the time to help the customer and explain everything about the plan , phone and services that a customer can get with sprint, Don't rush my customers into buying a device just because you can make a commission , educate the customer and you will have a happy customer . treat them like gold , do whatever it takes to keep them. if it was my choice i start fresh with every retail store and change the face of customer care forever starting with the first impression . this is critical towards the first step in changing what so many people say is the worst service in the business. we can do better, we must do better. loyal employee
    sgove1701