» Analysts Doubt Effectiveness of Sprint’s CEO Replacement StrategyTelecommunications Industry News

Telecom News Editorials Reports Glossary

Analysts Doubt Effectiveness of Sprint’s CEO Replacement Strategy

6:30 am on October 10, 2007 | Category: Business, Corporate, WiMAX, Wireless

Struggling wireless carrier, Sprint Nextel’s recent decision to replace its Chief Executive Officer, Gary Forsee, won’t stop subscribers from defecting to rival cell phone operators, according to Stifel Nicolaus & Co. analyst, Chris King.

â€œThe problems that Sprint Nextel has are bigger than Gary Forsee,â€ said explained King, who currently has a â€œholdâ€ rating on Sprint’s shares and doesn’t own any. â€œThis is certainly not a story that’s going to be turned around in six months or so, regardless of who’s in charge.â€

Sprint has struggled to keep up with larger rivals, AT&T and Verizon Wireless, ever since its acquisition of Nextel Communications Inc. in 2005. The combined company’s stock has fallen 23% since the merger, and despite costly advertising efforts, many Sprint Nextel subscribers continue to defect to rival carriers.

Most analysts point to the difficulties of fully integrating Sprint’s networks with Nextel’s, as a major reason behind the company’s ongoing decline, while others feel that executives have not focused enough of their attention on the cell phone market since committing $5-billion to the construction of a nationwide WiMAX broadband network.

â€œTheir peers, AT&T and Verizon, are growing revenues through adding new customers and adding new services for existing customers,â€ said Todd Rosenbluth, a New York-based analyst from Standard & Poor’s. â€œThey don’t appear to have a clear handle on the direction of the company.â€

Whatever the underlying causes of Sprint’s decline, most industry experts have strong doubts about whether replacing one executive can turn things around.

Telecommunications Industry News