A large institutional money management firm, Relational Investors, has picked up 1% of Sprint (S) and wants the company to cut capital spending and sell its long distance operations. The large investor is also not enamored with Sprint’s plans to spend $3 billion on WiMax as the basis of its next national broadband network.
If Sprint’s CEO Gary Forsee does not want to go along with these suggestions, the next move would usually be to show him the door.
Forsee has presided over a poorly executed integration with Nextel. He has watched his former chairman and president leave. He has also been at the top while Verizon Wireless (VZ) and Cingular AT&T (T) have increased their subscriber bases at a rate faster than Sprint.
The problem with moving out Foresee at this point is that WiMax may be the technology that saves the company’s bacon. The system, which will cost $3 billion, will blanket a geography that reachs over 100 million potential customers. Intel (INTC), Motorola (MOT), and Samsung are behind the technology. So, Sprint is not taking the risk alone.
Forsee may be on his way. But, the bet on WiMax has already been placed. It is too late to push that train off the tracks.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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