news analysis For a fleeting period it looked as if Sprint Nextel's beleaguered chief executive, Gary Forsee, might pull through. After the second quarter, Sprint announced slowing subscriber losses and a revenue gain--albeit very modest.
But as one industry executive put it, "They pulled the wool over investors' eyes."
The truth is, very little has improved at Sprint. Analysts and industry experts note that the quarter ending in June is usually one of the industry's best periods, when low-income customers use tax refunds to buy more calling time.
The third, or summer, quarter is more telling. So when Sprint announced late on Oct. 8 that it would suffer a net loss of nearly 337,000 billed subscribers and that full-year sales and operating income would miss earlier targets, it also announced that the 57-year-old Forsee was out.
Now, Sprint's board of directors is wrapping up an accelerated search to replace him with a candidate who can resurrect the limping telecom carrier. With the help of executive search firm Spencer Stuart, the board is evaluating several candidates from the United States and overseas. The goal is to name Forsee's successor in as little as two weeks and no later than 30 days, sources say.
Seeking unshackled execs
Sprint cast its line overseas not only to broaden the pool of strong candidates but to avoid the snare of noncompete contracts often held by executives who have worked at other U.S. telecoms, says one industry recruiter with knowledge of the process. Landing Forsee from BellSouth was a struggle because of a noncompete clause in his contract at the time.
Potential hires from outside the United States include Sanjiv Ahuja, the well-regarded former CEO of European wireless carrier Orange, and William Morrow, a former Vodafone turnaround executive who is now president and chief operating officer at Pacific Gas & Electric.
Other candidates include Andrew Sukawaty, a former Sprint exec and CEO of satellite player Inmarsat, and Daniel Hesse, CEO of Embarq, the local phone division recently spun out by Sprint. Sukawaty is said to be leaning against taking the job.
Ahuja and Morrow had been interviewed for the Sprint COO job, which Forsee and the board had been looking to fill for more than a year. For that position, sources say Sprint also considered or approached telecom execs such as former BellSouth President and COO Mark Feidler and William Hannigan, No. 2 at AT&T before it was acquired by SBC Communications. Noncompete clauses in both executives' contracts raised red flags.
How Sprint got into this mess
Whomever the board picks, Sprint's new CEO will face perhaps the most daunting telecom turnaround in years.
Once an innovation and marketing force (remember hearing a pin drop?), Sprint has become an industry also-ran. Several of Forsee's key strategic initiatives, once held up as strokes of daring, are now in serious question.
He had hoped to elevate Sprint's competitive stature by aligning with cable companies such as Comcast and Time Warner Cable.
Those operators compete with AT&T and Verizon Communications by offering voice service using Sprint's landline and wireless networks. Industry analysts say Sprint's relationship with the cable companies has been strained as Sprint has turned its focus to future technology initiatives.
The beauty of Forsee's strategy was that it required only a couple hundred million dollars in up-front investment for integration of marketing and billing systems.
But what was once seen as strategic leverage for Sprint to compete with the other telcos might be seen as a needless distraction by the new chief. "Clearly, with Forsee's exit, this is up in the air," says Ed Lewis, a managing partner at consultant Relevant Business Group in Chicago.
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