Sprint CEO Forsee Resigns, Company's Outlook Downgraded
Confirming speculation published in this morning's New York Times, the Sprint executive largely responsible for guiding his company through the merger with Nextel has been ousted this afternoon by Sprint's Board of Directors. Gary Forsee is out as chairman and chief executive officer, and an upheaval of the board is necessary to keep Sprint going in his absence.
The explanation for Forsee's ouster speaks for itself: Sprint admitted after the close of business this afternoon that it is adjusting its guidance for fiscal year 2007 lower than its previous estimate, and that it lost approximately 337,000 post-paid subscribers in just the third fiscal quarter alone.
Assuming the company's rosier outlook just months ago is accurate, the downturn appears sudden. Last August, Sprint reported having grown its subscriber base by 400,000 for just the second quarter. Sprint isn't giving any reasons yet, though it may be forced to come November 1, the scheduled date of its next quarterly report. There we may learn whether Forsee was truly the cause of Sprint's troubles, or something else that begins with a lower-case "i."
Last April, Forsee made comments to the effect that the iPhone buzz for competitor AT&T would be overblown - that the high price tag would dissuade customers, and the uptake would be lower than anticipated. While the uptake wasn't colossal, it also wasn't a trifle, and Sprint may not have been as quick on the draw as Verizon with an answer.
But there's a deeper problem than competing with the iPhone: Sprint Nextel has been without a chief operating officer since August 2006. That fact has apparently been reflected in its recent quarterly numbers, coming dangerously close to reporting a loss for the second fiscal quarter on revenue that was actually a tick higher on the quarter. Unnamed sources told the Times that a search has been under way for a new COO since last year, but that nobody seemed to want the job.
So for now, there may be fewer than enough hands on the tiller of this already leadership-strapped company. Board member James Hance, Jr., former vice chairman of Bank of America, will step in to assume a new, non-executive chairmanship role.
That will help narrow the search process to finding just a CEO. In the meantime, without a COO to fill the spot, CFO Paul Saleh -- the former #3 man at Nextel -- will fill the vacancy temporarily, though that could be quite a long interval.
Meanwhile, an awkward new position called "lead independent director" will be created to buttress Hance, and Irvine Hockaday -- the once-retired CEO of Hallmark Cards -- will fill that part of the vacuum. It will be a troika of temporary semi-chiefs, with one executive - Saleh - now doing the work of three.