Len Lauer, Sprint Nextel Corp.’s chief operating officer and one of the company’s most high-profile executives, left the company last week after the carrier’s dismal second quarter put management under pressure to make a turn-around.
Sprint Nextel announced that Lauer was leaving the company, effective immediately, and that President and Chief Executive Officer Gary Forsee would be taking over Lauer’s responsibilities in addition to his own. The carrier said it won’t hire anyone for the COO position.
“Len has been an important part of the Sprint team for the past eight year and provided strong leadership and counsel,” Forsee said in a company statement. “We thank him for his many contributions and wish him well.”
Lauer also served as chairman of the board of wireless industry trade association CTIA and was slated to participate in the first day’s keynote at the upcoming CTIA I.T. and Entertainment show in Los Angeles, on the future of wireless enterprise. Shannon Nix, CITA’s manager for public affairs, said that Lauer was no longer serving as chairman and will not participate in the conference keynote.
“Since his service as COO at Sprint has now come to an end, he’s been relieved of his duties as chairman of the board of CTIA,” Nix said. She added that since Lauer’s term as chair would have ended with the I.T. show, the post will remain empty until the board elects a new chair.
A substitute speaker for the keynote panel had not been named by CTIA as of late last week.
Lauer began his career at Sprint Corp. as president of pre-merger Sprint’s consumer services group for global markets, and later moving up to president of Sprint Business, before moving to the global markets group. He served as president of Sprint PCS and became president and chief operating officer of Sprint in 2003; when Sprint merged with Nextel Communications Inc., Lauer kept the title of COO for the new company. Prior to his work at Sprint, Lauer spent five years with Bell Atlantic Corp. and 13 years with IBM Corp.
While several analysts noted that Lauer has a solid reputation in the industry, he also presided over the pre-merger Sprint’s ClearPay (or Assigned Spending Limit) debacle that bears significant similarities to its current difficulties: the company loosened credit requirements for customers, then found itself saddled with non-paying customers and low net adds when it tightened things up again.
“The current problems at Sprint are so similar (lack of credit checks for non-paying customers) to what happened when the ASL program harmed the company under Len Lauer’s Sprint PCS reign as president that we believe investors will be relieved at the news of his departure,” analyst Albert Lin of American Technology Research wrote in a research note.
Sprint Nextel’s stock has been on a near-constant slide since April of this year, when it was priced at nearly $27 per share. The stock had fallen to about $20 per share before the company reported second-quarter results, then took a steep drop to around $17 in early August.
After Lauer’s departure was announced, the stock climbed briefly to about $16.50 before tumbling back to around $16.25 at the end of the week.
Several analysts have noted that if Sprint Nextel’s stock continues its drop, the company could begin looking like an acquisition target.
In recent weeks, Sprint Nextel has tried to push toward a turn-around: tweaking price plans to make overage more expensive and preparing to launch a new advertising campaign with the tagline “Sprint. Power Up!” Sprint Nextel also began promoting a new service for business customers that promises a “one-stop shop, single contract and centralized bill with every element of a mobility solution including the hardware, application software, mobile voice and data usage, professional services and Sprint-centralized customer care,” according to a company statement.
“The departure of Lauer is a signal that management is finally reacting,” concluded Cowen & Co. analyst Tom Watts in a research note. RCR
