Can Sprint’s Directors Influence a Turnaround?

While the markets were closed on Monday for the holiday, speculation began to mount that Sprint Nextel Corp (NYSE: S) was on the verge of launching a price war against its competitors in an effort to win back its customers (see TheStreet.com’s article by Scott Moritz).

The depth of Sprint’s troubles became apparent on Friday when the company issued a statement that announced major layoffs of 4,000 positions and approximately 125 store closings in order to cut cost by $700-$800 million per year.

The company deemed these harsh streamlining measures necessary because of its loss of approximately 885,000 subscribers, the company said in its January 18 press release.

Sprint has a limited amount of latitude in terms of how it attempts to reverse its downward trend. Analysts see the cell phone market as an already mature market, where there are few opportunities for a carrier to acquire new subscribers of first-time cell phone users, since everyone already has a cell phone these days.

Therefore, Sprint’s only viable option for increasing its subscriber base is to win away subscribers from its competitors. However, the company can implement that strategy by either offering better services or lowering its prices, which would mean a price war. But is the latter the right strategy for the Management Team to pursue?

NewsVisual decided to create an IntellectSpace Knowledge Map in order to illustrate the business connections of Sprint’s Board of Directors as a method for assessing their knowledge of business and for determining the likelihood that the telecom’s Management Team would benefit from the former’s advice.

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The Knowledge Map shows that several of Sprint’s Directors have strong business connections to other companies where they most likely have the experience of having to make critical business decisions, like the one confronting Sprint now.

For example, because Director William H. Swanson is also the CEO/Chairman of Raytheon Co. (RTN) and Director Frank M. Drendel is also the CEO/Chairman of CommScope Inc. (CTV), these two Sprint Directors would certainly have faced similar competitive pressures in their own companies’ markets. They would, therefore, most like have some valuable insights to share with the Management Team.

Likewise, the following two Directors would most probably be able to offer sound advice because of their widespread involvement with other companies: Director Gordon M. Bethune is also a Director for Honeywell International Inc. (HON), Willis Group Holdings (WSH), Prudential Financial Inc. (PRU), and Aloha Airgroup Inc.; and Director James H. Hance Jr. is also a Director for Cousins Properties Inc., Duke Energy Corp. (DUK), and Rayonier Corp. (RYN).

(Note: The information contained and presented in Knowledge Maps is public information from the Securities and Exchange Commission of the United States of America).