Sprint: In a World of Hurt, Slowly Makes Improvements

My chief complaint about Sprint (S) has been the customer service, an issue addressed head on by new CEO Dan Hesse in his initial conference call. My experience over three contracts has been that the issue has made a dramatic improvement.

After releasing abysmal Q4 results, Hesse said:

The fourth quarter financial results reflect the challenges facing our Wireless business. We are making significant changes across the organization in an effort to improve execution, stabilize our customer base and deliver on the opportunity provided by our assets. Given current deteriorating business conditions, which are more difficult than what I had expected to encounter, these changes will take time to produce improved operating performance, and our near-term subscriber and financial results will continue to be pressured. Additionally, in light of current capital market conditions, we are taking steps to increase our financial flexibility and mitigate refinancing risk by borrowing funds from a revolving credit facility and discontinuing declaring a dividend for the foreseeable future.

I think it would be hard for anyone to say that Sprint is not in a world of hurt right now. With rival AT&T (T) and Verizon (VZ) adding subscribers regularly, Sprint's loss appears to be their gain. Sprint has ranked at the bottom of the major wireless carriers in customer service for what seems an eternity now and the loss of subscribers directly correlates to those ratings. Fixing the customer service issue is the #1 priority. Based on my initial first person experience(s), the improvement has been dramatic and positive.

One issue is that corrections like this will take a long time to show up in the financials. While it has to be done in order for the company to survive, a ruined reputation like Sprint's currently takes far longer to fix than it did to ruin in the first place. As Berkshire's (BRK.A) Buffett said, "It takes a lifetime to build a reputation and ten minutes to ruin it". This is Sprint's primary issue.

The good news for shareholders is that so far Sprint has made big improvements here. The bad news is that it will take time. Hesse has wisely not started dumping assets for short term results and long term. That decision will pay off if for no other reason than if he sells them a year or two from now, he will be selling them into a much better environment and get a much better price for them.

This will take a while, but so far, Sprint is doing the right things. I still think Google (GOOG) may end up buying them.

Disclosure: Subscriber, None in Stock.

Comments

[NextelAccessories]

Improvements in customer care are significant. This company will turn it around! Just needs some time!

[User 160391]

Back in 2003-2004 I worked for Sprint and unfortunately I could see how bad management of the customer service was. All they cared about was cross-selling different products. The reps also had no idea what they were doing, and supervisors wouldn't take escalated calls. We were pretty much encouraged to argue with the customers ourselves. I'm so glad I don't have to do that anymore. Sprint has always denied their customer service problem and it's time for a massive customer service overhaul.

[1planet]

Tell Google to go buy it for $33.00 a share while they have the money. Call Carlos St.Reyes 432-664-2241 or email me at planetsatellite@sbcglo... to ran it. We can do it.

[1planet]

Company Policies ( Recommended policies for Sprint )

1. Customers are your Boss. Without them you do not have a job.
2. Greet all your CUSTOMER. By name if possible.
3. If you don't have nothing to do. DON'T do it here. Find ways to increase productivity.
4. We are all in the same boat. One for all and all for one. We have one common GOAL.

[Beth]

Woah, a positive Sprint article?

[KathrynCNC]

Having a 2% ownership in S puts Todd Sullivan and his company in a position to care about what happens to S's stock value. A desire to serve on S's board of directors is one thing, but saying, in effect and with apparent anger, that he wants to serve on the board to straighten things out is addressing S's woes from the negative perspective. A negative comment thrown as a dagger does nothing but wound, while a scalpel wielded by a skilled surgeon produces a benefit, short-term, long-term, and possibly both. My husband and I have made separate purchases of S recently because Hesse has experience needed to turn the company around. Going on 3 months at the helm, he has been forthright about the state of affairs discovered when he stepped into his office. What inspires my confidence in him and his abilities? Perhaps it is his own confidence in his ability to do so. Otherwise, why would he have accepted the position knowing that a failure would certainly follow him for the rest of his life. The man has good, old-fashioned "gumption." Look it up. There may not be a dividend for a while, but the man found he'd inherited a bathtub with a missing stopper. I believe he has the intellectual capacity and skills necessary to perform short-term maintenance while implementing the long-term fix. KMC

[Donald E.L. Johnson]

Barrons.com today posted an article saying S investors shouldn't wait. It notes the weak S has entered a price war with stronger competitors, and the new CEO is saying the company's in worst shape than he realized when he joined. Looks like a very bearish story to me.

[KUfan]

I am also a former Sprint employee and I can honestly say that I was never encouraged to argue with customers. In fact I was encouraged to bend over backwards to help customers. Although I am sure training is somewhat of an issue, I believe it has more to do with the quality of folks being hired into these customer service positions. You cannot teach a bear to behave like a dog, no matter how much time and effort you put into training. Meaning you hire folks that do not care about the company or the job and no amount of training is going to make them care about the quality of the work they do. Sprint has tried many things to improve their customer service, I think they need to concentrate on hiring a better quality of rep.

[User 161569]

Hesse will have to reverse himself on divestitures soon. S's cash flow will not be sufficient to dig their out as the going forward effect of customer losses takes firm hold in '08. Spectrum is the logical asset. They might be able to tape some to tape some to Nextel so they can "sell" it to T-Mobile. T-Mobile has the customer service credibility to spin a Nextel acquisition effectively. The iDEN 900Mhz frequency range has something to offer long term to T-Mobile. Offer iDEN/umts phones. It has some potential and let's face it, Sprint can't afford Nextel, WiMax, CDMA/EVDO Wireless, etc. so even at a fire sale subscriber price they "win".