Sprint Must Resist Ralph Whitworth 7 comments
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Has anyone at Sprint (S) called execs at Home Depot (HD) to inquire into their regret level at listening to Ralph Whitworth? Whitworth,
who owns roughly a 2% stake in Sprint through his investment company,
Relational Investors, has been sparring with Sprint. Last fall, he
threatened a proxy fight if management did not make vast improvements.
He wants the company to:
1- Spinoff of its long-distance unit or
2- Alter its $5 billion plans for a WiMax high-speed wireless network.
Those of us with memories longer than 6 months can remember Whitworth's last "value destruction" efforts at Home Depot. There, he ousted Bob Nardelli and prodded management to sell the supply unit and try to take on massive debt to repurchase huge blocks of shares. First talked about early last year, here is a brief refresher of the events. Shares have shed 30% since then. Thank Ralph, shareholders.
Is Sprint really considering adding Whitworth?
CEO Dan Hesse seems to be off to a good start. Already he has:
1- Announced a plan to shed 4,000 jobs.
2- The formal shift of its headquarters from Reston, Va., where Nextel was based, to Overland Park, Kan., Sprint's headquarters, seems to be in the works. Finally creating one company.
3- Discussed options for Sprint's WiMax unit, including a spinoff of that business or merging it with Clearwire (CLWR).
4- Based on personal experience, the customer service issues that have almost destroyed the company have improved .
The last thing Sprint ought to do is cave to avoid a public fight with Whitworth. What they ought to do is welcome it and point out his recent history. That ought to be more than enough to end the discussion.
Disclosure : No position
He wants the company to:
1- Spinoff of its long-distance unit or
2- Alter its $5 billion plans for a WiMax high-speed wireless network.
Those of us with memories longer than 6 months can remember Whitworth's last "value destruction" efforts at Home Depot. There, he ousted Bob Nardelli and prodded management to sell the supply unit and try to take on massive debt to repurchase huge blocks of shares. First talked about early last year, here is a brief refresher of the events. Shares have shed 30% since then. Thank Ralph, shareholders.
Is Sprint really considering adding Whitworth?
CEO Dan Hesse seems to be off to a good start. Already he has:
1- Announced a plan to shed 4,000 jobs.
2- The formal shift of its headquarters from Reston, Va., where Nextel was based, to Overland Park, Kan., Sprint's headquarters, seems to be in the works. Finally creating one company.
3- Discussed options for Sprint's WiMax unit, including a spinoff of that business or merging it with Clearwire (CLWR).
4- Based on personal experience, the customer service issues that have almost destroyed the company have improved .
The last thing Sprint ought to do is cave to avoid a public fight with Whitworth. What they ought to do is welcome it and point out his recent history. That ought to be more than enough to end the discussion.
Disclosure : No position
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The author is using extremely poor logic when he implies Home Depot's share price decline is due to Whitworth's presence on the HD board. The decline in HD's share price since August 2007 is due to the implosion in the housing market and credit market.