New CEO gets to try to turn Sprint around

Sprint Nextel s on Tuesday picked industry veteran Dan Hesse, 54, to be CEO and help the No. 3 wireless phone provider to recover from recent subscriber losses.

Hesse replaces Gary Forsee, who was forced out in October. James Hance will remain the non-executive chairman.

Sprint, with 54 million customers, trails Verizon and AT&T and has lost ground since it acquired Nextel in 2005.

Hesse said in a statement he's confident that "through solid execution and commitment to our customers, we can reinvigorate our operating performance and return the company to a growth trajectory."

He added, "We will review every aspect of our strategy … to lead Sprint to the forefront of the wireless industry."

Hesse knows Sprint. He ran its local telecommunications division, a wired-line unit, before Sprint spun it off last year to create Embarq eq, where he remained as CEO.

Prior to that, Hesse was with AT&T t for 23 years. He was CEO of AT&T Wireless services from 1997 to 2000, when it was the USA's largest operator.

Telecom watchers say that Hesse faces a tough challenge.

"His choices are quite limited," says Shahid Khan, a partner at IBB Consulting, which tracks telecom trends.

The Nextel acquisition presents "a fundamental problem," he says. Sprint bought a company that "runs on a completely different network."

In addition, the two companies "have completely different sets of demographics."

Sprint also alienated Nextel users, he says, by offering "poor customer service."

Sprint reported that it lost about 337,000 customers in the third quarter.

Financial results also suffered. Net profit in the quarter fell 77%, to $64 million, vs. the same period last year on revenue of $8.7 billion, down 1%. Average revenue per user fell 3.2% to $59.

Sprint's stock is down about 45% since it merged with Nextel. Shares closed at $13.76 Tuesday, down 15 cents.

Some analysts say Hesse has options, including pulling back on plans to create a $5 billion WiMax wireless broadband service.

"He needs to focus on the wireless customer experience to rebuild customer care, minimize churn and reinvigorate subscriber acquisition," says Berge Ayvazian, chief strategy officer at Yankee Group.

Ayvazian wants Hesse to boost sales at Sprint's retail stores and chains such as Best Buy where the company is losing share. In addition, he says, Sprint should spin off Nextel and buy smaller rival Alltel.

"It's a complementary carrier that uses the same network," he says. "If they were to combine, they would have 65 million subscribers under common ownership."