Sprint Announces Q3 CEO Loss
Sprint Nextel has terminated CEO Gary Forsee’s contract–and not because of excessive calls to customer service. Under pressure from investors over the company’s deteriorating financial performance, Forsee stepped down as chairman and chief executive officer today, leaving as his legacy a lowered third-quarter earnings forecast and net loss of approximately 337,000 subscribers in Sprint’s key “post-paid” market segment.
Rumors of Forsee’s imminent resignation began ciriculating earlier this month when The Wall Street Journal reported that activist investor Ralph Whitworth had lost confidence in Forsee and was threatening a proxy fight for board seats unless Sprint dealt with the situation “immediately.” Apparently, the board took Whitworth’s warning to heart. In a statement, Sprint board member Irvine Hockaday said “the decision to seek a new CEO was based on the board’s belief that it is the right time to put in place new leadership to move the company forward in improving its performance and realizing corporate objectives.”
That and the roughly 10% decline in Sprint’s share price over the past two years.
Anyway, with Forsee out of the way, the search for a new CEO is on in earnest. But it won’t be easy. Finding someone to burnish Sprint’s fortunes, stop the bleeding in its core cellular business and make good on its WiMAX promises is a daunting task to say the least. “There’s no silver bullet the new management team can bring in,” said Pacific Crest Securities analyst Steve Clement. “Things are still in limbo.”