Sprint's new CEO showed grit from the start

Don't let the polite manners and Jimmy-Stewart-like earnestness fool you.

Dan Hesse, Sprint Nextel's s new CEO, has a steely core that belies his nice-guy image. Within weeks of arriving on Dec. 18, Hesse released three top executives, including the person who had been acting CEO. He also announced plans to cut 4,000 jobs and jettison underperforming stores and distribution outlets.

Hesse is characteristically low key — and plain-spoken — about his swift housecleaning. "Accountability is a big thing with me," he says simply.

Under the former CEO, Gary Forsee, Sprint began bleeding customers — more than 1 million in 2007. AT&T t and Verizon Wireless vz feasted on Sprint's misery, adding more than 2 million new subscribers apiece in the fourth quarter alone.

Forsee, who engineered the Sprint-Nextel merger in 2005, was shown the door in fall. Hesse, 54, was CEO of Embarq, a Sprint spinoff, when he was tapped to take over.

Pressure on Hesse ratcheted up last week when Verizon announced an all-you-can-eat wireless plan for $99.99 a month. It was a watershed moment for the U.S. wireless industry, which has historically sold big buckets of minutes for a set monthly price.

Within hours, AT&T and T-Mobile matched Verizon's offer. Sprint has yet to respond.

Hesse declines to offer any specifics, but he clearly sees an opening for Sprint. "Let's just say I'm glad they put their cards on the table," he says with dead calm.

Roger Entner, a senior vice president at IAG Research, thinks Sprint will counter with an unlimited plan that is slightly cheaper than what AT&T and Verizon are offering. He doesn't think Sprint can wait very long to respond.

Those who have worked closely with Hesse don't doubt he can deliver.

"Dan is a person who is prepared to take risks, but he's not a gunslinger," says Mackey McDonald, CEO of VF Corp. vfc, the world's largest apparel maker. Hesse joined the VF board nine years ago. "He's a very strategic thinker."

It remains to be seen if Hesse can restore Sprint's luster. Shares have lost more than half their value over the past year, reflecting Wall Street's frustration with the company's botched efforts to meld the Sprint and Nextel brands, cultures and operations.

Sprint committed another unpardonable sin: It surprised Wall Street by losing far more subscribers than expected — more than 800,000 in the fourth quarter alone. The news was announced a month after Hesse's arrival. Sprint shares plunged 25% that day.

Hesse says he was also caught off-guard. "The subscriber losses — that surprised even me."

At AT&T, learning to think big

Hesse's response was blunt. A week after the subscriber losses were announced, three top executives left: Paul Saleh, the former chief financial officer and acting CEO prior to Hesse's arrival; Tim Kelly, chief marketing officer; and Mark Angelino, president of sales and distribution.

Keith Cowan, Sprint's chief strategist, says Hesse's not-so-delicate message to the troops came across loud and clear. "A new sheriff is here," Cowan says. "People have concluded that 'I can either get behind this person or move on.' "

Hesse's eat-or-be-eaten management style got its start at AT&T in the late 1970s. The story of how he joined AT&T says a lot about Hesse's grit.

Back then, AT&T recruited only from Harvard and Wharton. Hesse was attending Cornell, so he didn't even rate a look.

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