SPRINT NEXTEL CORP. HAS TAKEN THE HEAD of its wireline spinoff back into the wireless fold, tapping Embarq Corp. Chairman, President and CEO Dan Hesse to become the wireless operator’s new president and CEO.
Hesse, 54, has served as the leader of Embarq since Sprint Nextel spun off the firm last year. During that time, the wireline company-which offers wireless service through a mobile virtual network operator (MVNO) agreement with Sprint Nextel-has gained 108,000 wireless customers, even as Sprint Nextel has struggled with subscriber losses.
Hesse has bounced around the wireless industry for more than 30 years. He spent 23 years at AT&T, ascending to the rank of president and CEO of the former AT&T Wireless Services Inc. from 1997 to 2000, and is regarded as spearheading the introduction of the carrier’s OneRate service plans. Prior to leading Embarq, Hesse was CEO of Sprint Nextel’s local telecommunications division.
“He is a proven leader with deep wireless experience as a chief executive and an established track record of generating strong operating performance,” said Sprint Nextel board member Irvine Hockaday Jr., who headed the carrier’s CEO search committee. “He has the board’s full support to take decisive actions necessary to improve our performance.”
Bold moves?
The real question, observers say, is how bold Hesse will be now that he has the top spot at Sprint Nextel.
“I hope he does make dramatic changes, because I think that’s what the company needs,” said analyst Walter Piecyk of Pali Research. “But it’s not like he just landed from Mars. . He doesn’t seem to me to be the type of senior manager to make dramatic changes. . It’s just not in the culture of where he came from and what he’s done throughout his entire career.”
Piecyk also noted that “AT&T didn’t have the massive problems that Sprint has” and reiterated his view that regardless of a new choice of CEO for the company, Sprint Nextel still will struggle in 2008 because it’s too late for any changes to have much effect in the coming year.
In contrast, independent telecom analyst Jeff Kagan took the view in a research note that “Dan is the right person at the right time to take Sprint back to the top of its game” and that Hesse has “a track record of doing just what Sprint needs.”
Iain Gillott, president of iGR Inc., said Hesse was “the safe choice” for the company.
“The good thing for Sprint is, he knows Sprint and he knows the wireless industry. He can hit the ground running. There’s no 90-day grace period of getting to know the ropes and build a strategic plan,” Gillott said. “They’ll do some planning, but he should have a fairly good idea of some things that need to be done.”
Plan of attack
Another question, Gillott said, is what the board has told Hesse his job is-whether he is to be a “fix-it guy” or a bold, aggressive visionary who should seek to go beyond stabilization to growth.
James Hance, the carrier’s nonexecutive chairman, said in a company statement that Hesse’s “mandate is to hone our strategy, improve our ability to serve our customers and execute in the marketplace.”
He added that Hesse “possesses marketing and innovation savvy along with considerable operating acumen.”
Hesse himself said in prepared remarks that “there is no company in the wireless industry with a stronger set of assets” than Sprint Nextel, and added: “I believe through solid execution and commitment to our customers we can reinvigorate our operating performance and return the company to a growth trajectory. We will review every aspect of our strategy as we intend to lead Sprint to the forefront of the wireless industry.”
Sprint Nextel CFO Paul Saleh had been serving as interim CEO since the departure of former president and CEO Gary Forsee in October.
Wall Street’s initial reaction to the choice of Hesse was to send Sprint Nextel’s stock down, from near the $14 mark prior to the announcement to a brief plunge to $13 per share the following day before rebounding.
