Rumor: Sprint to Spinoff Nextel

A curious rumour surfaced today a couple of hours before the close, saying Sprint Nextel Corp (NYSE:S) has hired Morgan Stanley and initiated director Ralph V. Whitworth's plan to spin-off Nextel.

According to the rumour it could and must be viewed as huge positive for S. Spin-off announcement 'expected' in 2-4 weeks.

Considering Sprint Nextel (NYSE:S) has been subject to various chatter (both positive and negative), I wanted to highlight some very insightful feedback from a NCN member. He notes:

Both iDEN and CDMA subscriber losses have been huge... this was a stupid deal in the first place and unwinding Nextel now at a depressed price makes no sense. I think they should hold on until the market conditions improve and the company shows solid subscriber growth. Not sure if this is a concession that the Q-chat feature on Rev-A (QCOM product) is not viable technologically. Either way, this is not going to solve CDMA business of Sprint at all. Sprint should have just spend billions on improving coverage like VZW did in the late 1990s/early 2000s. It's paying huge dividends. Sprint is scr*w*d for sure.

Notablecalls: Couldn't agree more.

Comments

[your dad:]

This paper would fail a 7th grade English class. Why is it on the internet?

2008 Mar 06 06:46 AM

[Nextel Acce...:]

This makes no sense and is opposite of what management at Sprint is saying. I don't believe it.

2008 Mar 06 08:07 AM

[Gimpson:]

No. This will not happen. Did this rumor surface anywhere other than this very post? I kind of doubt it.

If Sprint spins of Nextel, I'll eat my boxers.

2008 Mar 06 08:47 AM

[Unhappy Ind...:]

Tell me - what has Sprint management done that DID make sense? Purchasing/Merging with Nextel made no sense at the start, but that never stopped them. Running off all the former happy iDEN customers made no sense either, but Sprint management still did it.

For indirect local dealers like me, hearing that Sprint would pull the plug and release Nextel back into the hands of someone who actually knew & cared about the wireless industry would be a welcome relief.

2008 Mar 06 08:48 AM

[magic wireless:]

Sprint is under new management so associating them with the previous administration is like associating Mccain/Clinton/Obama with the current Bush administration. Everything that the current management is stating is that they are refocusing on IDEN and trying to breathe life back into that brand.

Sprint will eventually turn itself around or be purchased in totallity or sold off in parts. If things dont even out by the 3rd and 4th quarter then I think we will see a Google, or a consortium of companies buy them out. Sprint has too much valuable spectrum for this to not occur. In addition everyone forgets that as bad as it is they still have over 52/53 million subscribers. I wouldn't get out the Kleenex for Sprint just yet.

2008 Mar 06 09:01 AM

[GuyWhoKnows:]

Fact, Sprint prior to Nextel was consumer oriented. Nextel was prodomonately business customer oriented. As a consultant I had many county government with large accounts and desiring Nextel to expand coverage in Area.

I recently met business customer with workers scattered across several states with Nextel with push to talk and group talk. When Sprint took over he add computers and air cards to all his people. Big account for Sprint. Sprint trying to moving Nextel to its network screwed up. Service turned bad, hours on phone, prices incorrect, network up and down. I heard yesterday they have shut down Sprint Service. In talking with the nuts and bolts of the organization, techicians, engineers, and customer service, they are lost trying to be everything to everyone. As one told me, Nextel is a different product for a different market. Sprint needs to separate it wireless for the kids and its wireless for the business.

Stock will hit $4.10 be action is taken to get it right.

2008 Mar 06 02:42 PM

[Wade:]

This is very likely a rumor started by a competitor's sales force to "scare" customers away from the highly rejuvenated iDEN network and Nextel Direct Connect. This report is poppycock.

2008 Mar 06 02:45 PM

[Finance Geek:]

I am a former Nextel employee -- I refuse to put Sprint-Nextel on my resume. When I started with Nextel in 2000, the economy and tech stocks were booming, the stock had just split and was trading at $80/share. By mid-2001, the stock had dropped to $11/share, then of course further bad news, 9-11, etc, By mid-2002, the stock was below $2/share and there was serious talk of NASDAQ delisting, missed covenants, possible restructuring. The firm bravely weathered the storm and the stock price eventually returned to a very respectable and enviable level of $35/share. Nextel did some very clever things -- too numerous to list here and some not so clever things . Can't blame Donahue and the BoD for selling Nextel down the river and completely trashing its brand with the mini-brains at Sprint, but when the merger was announced, there was this sickening parade of corporate sycophants and spin-meisters trying to convince us all how great things were going to be. This is corporate hubris at its worst and Sprint deserves the fatal blow that is sure to come one day soon

2008 Mar 06 02:56 PM

[The real Bi...:]

Hide and watch, one of the LARGEST 3 cable operators will buy Nextel..... they've rolled out VOIP, wireless is next..... don't buy any denials, just had to wait until Sprint decided to do just what this blog is saying.....

2008 Mar 06 04:28 PM

[xnext:]

If this rumor has any basis in fact, I'd look for Cyren Call to buy iDEN. Cyren Call is a company founded by Morgan O'Brien and staffed with many ex-Nextel executives. They're trying to create, develop and market a gov't only network (i.e. law enforcement, first responders, EMTs, etc.). John McCain is a "friend" of theirs.

2008 Mar 06 06:24 PM

[Frustrated:]

It amazes me that many of us can write down the many issues that Sprint/Nextel has and the many causes that created these issues and yet the brass at Sprint has yet to figure out a way to fix them. I agree with most of you that the merger was a mistake to begin with. There were no coverage gains or technology gains by the merger. When will Sprint recognize the true problems and put their money on expanding and improving their CDMA network and sell Nextel to someone that is willing to reinvest in the technology. Let SK Telecom buy Nextel and reinstall Donahue at the helm to put it back on track.

2008 Mar 06 06:24 PM

[money laundry:]

No way separate but I look for them to be absorbed by a winner from another area. I personally am taking advantage of the depressed prices buying a few shares.

2008 Mar 06 09:50 PM

[6creamypints:]

We use about 50 NEXTEL Direct Connect phones and Blackberrys at my work. Sprint can pound sand. Don't mess with my NEXTEL unless it is to sell to Google or someone that knows what they are doing.

2008 Mar 06 11:26 PM

[eyesopenedwide:]

As a former Nextel employee during the "deal from hell", I would like to comment from first hand experience.

First of all, the promise of synergy-savings touted to the investors, through the possibly of combining existing sites; was at the least, an uneducated promise, and at the most an out-and-out lie. In either case, it was unexcusable. In my opinion, Sprint, for too long, depended on its ability to cast a spell over the public, convincing them to part with hard earned cash for a promise in the future they couldn't deliver.

Telecom is no longer an elusive, little understood hobby for the wealthy. It is a potentially high-profit business, that should support a world that wants everything now and with as little of hassle as possible. Its development is dependent on educated landlords, tower owners, zoning officials, and consultants; all looking to get a piece of the pie. Let's face it, towers are vertical real-estate, and prime property sells/leases at prime rates to the wireless carriers.

Second, some or many of the legacy Sprint persons, came from the landline business. Some had over 30 years experience. That puts them back to the days prior to deregulation...when you didn't have ANY choice in picking your landline company. Remember the old Bell commercials "We may be the only telephone company in the area, but we try not to act like it." In a business where your customers are pretty much locked into the service, there isn't much incentive for the management to be concerned with customer satisfaction.

On the other hand, the legacy Nextel persons help build a wireless network, during the boom of the industry. They knew the importance of delivering a top-notch service including customer satisfaction. There was a commitment to give the best was to get the best. Nextel was pricey compared to the competition, yet they had the LOWEST churn rate in the business. Business counted on them, and they delivered on their promises.

Third, the Nextel company, with its approximately 26,000 employees, depended on each member of their team to make this promise happen, up to and including the CEO. Sprint on the other hand, brought to the table nearly double that amount of employees, many in executive positions who seemed to have rehearsed hundreds of different excuses as to why it couldn't be fixed, instead of creative solutions that got business done.

One of the things that struck me most during this time was management's ability to pigeon-hole a problem and refuse to take it to the Director or VP level. These were not small issues and involved departments outside of the area department managers territory. I can only imagine that if information wasn't going up, then it wasn't coming down either. Too many hidden agendas from people trying to stay one step ahead of the lay-offs I suppose. In any case, I know for sure, that even two and 1/2 years later, some of those problems have never been rectified and will only add to the flailing company's problems.

I was part of the Nextel team. A group of people who cared enough to be of service to the public, and deliver quality, value, and commitment to the communities we served. It personally sickens me to see that my many years of hard work was so callously mismanaged down the drain by a group of highly paid executives who don't much care about the company as they do their own ego and pocketbooks.

I don't know that there is much hope for a solution that will be win-win for anyone. Hard to hang on to hope when public opinion doesn't support the CEO's actions for the long haul road. Good luck Dan. I hope you can weed out the snakes, stand strong, and turn it back around.

2008 Mar 18 09:00 PM

[xnext:]

Nothing will change until the OP gang (Walker, Azzi, Yosick and Usry, to name a few) are gone. They are prime examples of process over results, fiefdom building, the hubris of tenure and sheer contempt for anyone outside legacy Sprint and OP.

2008 Mar 22 04:25 PM

[Dead Tech w...:]

I actually hope that this rumor is true. That way after I get laid off from sprint all I'll need to do is wait for nextel to become a real company again and get my old job back. I was the tier 2 tech support for IDEN and after april there will be no tier 2 support for IDEN at all. I would hate to have an iden phone then for there will be no assistance or support. Mind you sprint is keeping thier CDMA support techs. So you guess where the train is going.

2008 Apr 02 02:07 AM

[Indirect De...:]

It's interesting to get views from a variety of Pre-Merger Nextel people from a variety of levels/angles, be it Tech, Management, or our Indirect Sales Channel. Everybody on our side of this merger seemed to have the same reaction during the "adjustment" which has never ended... shock and at the level of stupidity, arrogance, incompetence, and apparent insanity over on the Sprint side.

If there's anyone's opinion that you should pay attention to, it's that of the indirect dealer. These are dealers licensed to sell our products, but who can typically sell any OTHER wireless carrier they want also... they get to make comparisons where the wheels meet the road. They interact with the customers and the companies on a daily basis, so they are the ultimate "canary in the coal mine."

I too long to deal with management that knows and cares about the wireless industry. And to all you indirects out there - from over here in Denver, I'm sorry things went to crap. They cut our organization off at the head - the director, the managers, and a few of the supervisors were all brought in from Sprint. They didn't want to know how things worked and almost seemed perverse in making things not work while making the workplace unpleasant. Prior to the merger, there was a certain joy in getting business done on a daily basis. The past year has been a parade of our best people getting the heck out of there while the getting is good.

I would gladly abandon Sprint and get with a resurrected Nextel, especially knowing we were competing with Sprint and every success would be a thumb-to-the-eye for them. As far as I can tell, our customers (and former customers) share the attitudes reflected here.

2008 May 05 04:02 PM

[saml:]

How many companies are going to buy Sprint?

2008 May 06 03:15 PM

[Traume:]

I can't see *anyone* buying 30-year old technology. It's slow, and EXTREMELY labor intensive. The best thing they can do is roll existing iDEN subscribers over to Q-Chat and bury the old nextel network somewhere on the grounds in Kansas City.

2008 Jun 02 09:10 PM

[User 205092:]

First of all, I'm not sure how you figure that iDEN is 30-year-old technology. Nextel didn't roll out their iDEN network until 1997. Secondly, and mainly, I always like to say that you can't fix what's not broke. iDEN is a very good and very reliable technology. I recently switched to Verizon, because of Sprint and their lack of knowledge of, well, anything. But honestly, Nextel was better, both as a company, and with their service.

2008 Jun 04 01:29 AM

[Cracker:]

I have to say that the only thing Sprint did wrong was to buy Nextel, Sprint was just fine the way it was, and you cannot take two different plat forms and put them together. Everybody on the bottom knows this but the two CEO’s of both companies’ did not care, all they can see is the dollars they can make. I have seen a lot in the past 35 years, my father is retired BellSouth and he has told to me to hang on because its not over yet. Sprint buying Nextel was the biggest mistake in Telco’s history. One thing I cannot figure out is how can the board of directors pay 52m to get reed of the CEO that has failed at his job. If you our myself do not perform do think they will give us anything closes to 52m and 94k a month for retirement, corporate jet anytime, and find you another job making 1m a year, I don’t think so. The Board of directors needs to be cleared out, this is good old boy club you take care of me and I will take care of you.

I have met some good people from the Nextel side and it is a shame that you have to deal with a line drawn in the sand.

2008 Aug 05 11:06 PM