Gary Forsee, the CEO of Sprint (S), is gone. He had been in management at the company in the 80s. He came back as head of the company in 2003. He lead the buy-out of Nextel the following year.
The Nextel merger was a bust and Forsee bet company’s future on a Buck Roger’s technology called WiMax. It is promising, a way to deliver wireless broadband. It may be the best stuff it the world, but it will not be completely in place until three years from now. Investors would not wait.
The failure of the merger was made clear again when Sprint pre-announced some of its third quarter earnings. The company said it now expects to report a net loss of 337,000 post-paid subscribers and lower annual consolidated operating revenue and adjusted operating income before depreciation and amortization than previously expected. Sprint said it now expects consolidated operating revenue for 2007 to be between $41 billion and $42 billion, while adjusted operating income before depreciation and amortization is now expected to be between $11 billion and $11.5 billion
Forsee was in the telecom business most of his career. There was nothing wrong with the Nextel merger per se. It created the third largest wireless company after AT&T (T) and Verizon Wireless, in a business where scale counts.Sprint, on its own, may have ended up much worse off as a smaller company in an industry dominated by giants. But, the salvation of the company was too far in the future and the potential of WiMax was too fuzzy.
Forsee paid for that.
Douglas A. McIntyre
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