Sprint seeks new CEO amid shakeup
NEW YORK -- Sprint, reeling from news reports that it is searching for a new CEO, plans to announce that its chairman and CEO, Gary Forsee, is stepping down, according to people familiar with the board's plans.
Sprint, which could announce Forsee's departure as early as Monday, plans to appoint an interim successor until a permanent replacement can be found, these same sources said. They declined to be identified by name or affiliation because no official announcement has been made by Sprint.
Reached Sunday, Sprint spokeswoman Leigh Horner declined to comment.
The management shakeup follows efforts by Forsee and the board to recruit a chief operating officer, with the understanding that the person would become Sprint's CEO. Though some potential candidates were approached, the job was never filled.
After Sprint's disappointing second-quarter earnings report, however, the board decided that new leadership was needed and started looking for a new CEO, the sources said. The search process began in earnest in late summer, with the goal of finding a suitable replacement by year's end.
The board had hoped to keep its plans under wraps, the sources added, at least for a while. But the timetable got sped up after The Wall Street Journal reported — on Thursday on its website — that a CEO search was underway.
The story, which riveted the telecom world, put a spotlight on Sprint. The company responded with a firm "no comment," but the attention put pressure on the board: As a publicly traded company, Sprint is obliged to disclose "material" developments that might be of interest to investors. No development is more material, perhaps, than a CEO change.
Since merging with Nextel in 2005, the combined company has struggled with a series of operational problems. All the pain has shown up in the stock price, which is down about 27% since the $35 billion Sprint-Nextel merger closed in August 2005.
Adding to investors' concerns, No. 3 Sprint has continued to show tepid subscriber gains — a key measure of a wireless company's health — since merging with Nextel.
As CEO, Forsee mapped out an aggressive wireless strategy that sought to marry the best of Nextel, a power hitter with business customers, and the best of Sprint, which has a long consumer legacy.
He also laid plans for the future of the business by investing heavily in a developing wireless technology known as "mobile Wi-Max," which offers DSL speeds at cut-rate prices.
In the end, Forsee simply ran out of time, says Jane Zweig, CEO of The Shosteck Group. While Forsee's overall strategy showed some promise, she says, day-to-day execution fell short, particularly with respect to the care and feeding of the core cellphone business.
"They are so focused on the future that their current customers just weren't being attended to," she says.
In the past year, Forsee has sought to assure investors that the company was turning the corner. But with each problem solved, a new problem seemed to crop up. By the end, Zweig says, investors lost patience. "At some point, you have to show results."
Zweig says the biggest challenge for the next CEO is trying to figure out how to get back all the customers who have left. "It's going to be an uphill battle."