Sprint's 'Against the Odds' Turnaround Looks Less and Less Likely 35 comments
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Sprint Nextel (S) continues to look for partners to share the cost of the WiMAX rollout, which will undoubtedly cost several billion dollars, but still has no takers.
Given the credit markets being what they are and, for all intents and purposes, a recession in place, major deals that might have been possible six months ago seem like longer shots now. The prospect of Sprint spinning off WiMAX completely to Clearwire (CLWR) or iDEN or being taken over outright, given the intrinsic value of Sprint's spectrum holdings alone, may not happen now in the short term due to macroeconomic conditions.
This situation may end up being a blessing in disguise for CEO Dan Hesse and any Sprint Nextel partisans who wish for the company to remain independent; new management gets some breathing room to turn around the company. Short of transplanting headquarters from Kansas to a location where leadership actually has to care about employee satisfaction because there is a market alternative for good talent (rather than knowing that the best alternative is working for H&R Block (HRB), Hallmark Cards, Applebees, McDonald's (MCD) or back to the farm, which has fostered a culture based on fear for one's job security and having the right political connections over self-initiative), or a wholesale change of entrenched management, it's hard to envision a near term solution to the Sprint malaise with the current lineup.
I continue to be a fan of Dan Hesse and believe he is capable, but turning around Sprint is more than a one or two person job. If Dan Hesse is successful in turning around Sprint Nextel, then he deserves to be enshrined with Lou Gerstner and Lee Iacocca in the annals of against-the-odds business turnarounds.
Disclosure: Author has a long position in S
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This article has 35 comments:
As a citizen worried about the US economy, my hope is that a buyer with cash and vision will step in and begin maximizing the management of these assets. The US economy needs innovation to generate new wealth/ jobs/ economic strength. Right now, all of that potential is wasting away in this cash poor company.
I love this guy :) Goooooooooooo Ed :)
There really are few places to work unless people are willing to move away from the midwest, and folks here are traditionally hesitant to do so. Being involved in and trained in a network specialty means you'd almost HAVE to move away from the KC metro area to find a position in voice telecommunications, and considering a lot of the more technical jobs at Sprint are centered around the KC area, those are the people most at risk of having to move.
You have to bear with the negative response because people who've never been farther west than Topeka don't realize that "the farm" really is a place where people grew up and go back home to on holidays. I've lived in Dallas and Denver and these things could be said and are true about both of those major metropolitan areas as well. You are correct, people simply have to have a reason to lash out when they fear that "an oustider" is talking trash about a place they hold so dear. The reason I now live back in Kansas City was because I fought hard for a position that would not only keep me at my new company, but bring me back "home". I think that's a true testament to the kind of place Kansas City is, people are willing to defend it and want to come back to a place they love
You have some dots.....now connect them
I passed on voluntarily leaving Sprint earlier this year because I believe we DO have the assets that will enable us to return to greatness. I did not move my family half way across the country to quit. However, your evaluation of the employee morale and management attitudes is 100% on the money. Hesse needs to initiate sweeping management reductions/changes, and there are still more unproductive, change-blocking individual contributors that can be removed. I am sure I will receive flaming responses to this, but it is realistic and it is the truth...we need more of both at Sprint right now.
I miss what we had at Nextel, we were winners, but we didn't have it all figured out and no one should pretend that we did. Everyone at Sprint has a tough job right now, because it is tough playing for a losing team. The merger was still a smart thing, but the lack of execution post-merger is embarrassing. Hesse has the right ideas and vision, it is now a matter of finding the people who can execute the plan and turn the ship around.
Because Sprint had a scorched earth policy towards Nextel employees? I am a current Sprint, former Nextel, employee and I can tell you the attitude in our region was to eliminate Legacy Nextel employees were very outspoken about it. The condescending sense of entitlement they had/have is incredible.
And of course by targeting Nextel employees they virtually ignored Nextel customers too, which is pretty much self evident and widely known. Nextel, of course, had the most profitable customers in the business.
It should be known that there are about to be a series of lawsuits against Sprint for improperly paying out commissions. It has already started in the retail channel( which you can google if you don't believe me). It is about to happen from corporate reps as well as indirect business's. I have had my commission checks skimmed for 2 years now. It's not just me, but every rep nation wide in my position.When I have brought it up I have been told to stay quiet about it. Their legal team said they are working on it and admitted the issue is borderline catastrophic.
The incompetence and arrogance of this company and it's management is staggering. Yes I believe Hesse has done some good since he's been in charge. But a captain needs some time to turn around a huge ship like Sprint. I just hope it gets turned around before there's a mutiny.
STOP TALKING TRASH ABOUT SPRINT
Ed, your points about fear and politics in the KC Sprint culture have been explained to me many times by Sprint employees, ex employees and Sprint partners. It is an innovation killing feature of the culture. It puts pressure on the employees to always be positive no matter what [read the comment from insider Sprint] and it squashes efforts to automate and consolidate functions for fear of eliminating jobs.
Well before the Nextel takeover, Sprint's headcount was too high compared to its industry competitors. It takes a lot of heads to manage processes that could/ should be automated. Verizon and ATT are way ahead on that count. That's why their costs - especially Verizon's costs- are so much lower than Sprint's. And, when I read about problems like not being able to pay commissions properly, I suspect that it has a lot to do with human error. Commissions - even complex formula commissions - are an easy function to get right when they are automated and when the back office systems are integrated. And getting commissions right should be one of the highest priorities for any company.
I bought this stock because Sprint has far and away the most promising assets in the industry for the next generation of telecom technology and the price of these assets is far below their market value. I thought that the company would be forced to automate and consolidate to stay competitive with Verizon and ATT, but I now think it will take a buyout to free the potential of these assets. The KC culture will keep the potential locked up.
How do you know Sprint has a "culture of fear" ?
I think the best thing they can do is to leverage their assets and people, and get back to their core business lines. They far exceed their competitors (Verizon and AT&T) at adopting new high speed data technologies, and making services and plans available at a reasonable cost. Sprint far exceeds AT&T and Verizon in "open access" as far as applications available, creative handset designs, etc. The HTC mogul I carry is well maintained and is pretty much state of the art in mobiles right now. It has EVDO RevA, GPS, and I have 6 GB of music on it and still have 2 GB free. It's basically the equivalent of a 3G iPhone. Yet I've had it since October of last year. Apple / AT&T have yet to even ship 1 3G unit.
So get back to the core business, fix it up, and then get back to WiMAX when the time is right. I also don't see any of the peripherals/subscriber units that were now supposed to be widely available at Best Buy, etc. WiMAX is too early.
The best thing that could happen to Sprint Nextel is to completely shake things up and rock everyone out of their complacency and respective comfort zones. And if people in KC don't like it, they can go to work at one of those wonderful institutes of higher learning that "sambeauregard" cited in his post. The folks at the OP campus have made 20-year careers out of just showing up and punching a clock -- it's time for them to put up or get out. And as for my former coworkers in Reston, same goes. I'm ashamed at how many of them have adopted the "work 8 and skate" attitude of their OP counterparts.
Three years ago, that attitude would have been grounds for dismissal; now it's an accepted part of the culture. And while the remaining employees are calculating how many weeks severance they are entitled to when the next round of layoffs occur, Verizon, AT&T and the others are systemically gutting SN's customer base.
So my advice to Dan Hesse is: Be bold and take no prisoners. You have nothing to lose at this point.
The sad part is that the entire truth still has not been disclosed. You are right on the money in regard to the atmosphere of fear that prevails at Sprint. (Particularly true if you are a legacy Nextel employee.)
As you recall from my previous posts, I forewarned that their bonds would hit junk bond status. That seemed to be almost a prophetic call as that has now occurred.
You may also recall that I inidicated that there are considerable issues with the creative accounting of commissions. If the statement above in regard to suits actually occurs I will tell you right now that it will be the complete unraveling of Sprint. Bankruptcy will be their only alternative.
The amount of money at stake here (in my opinion) may likely reach into the billions of dollars in regard to what the dealers and employees have been cheated out of. I am anxiously awaiting someone to file a class action suit which I will gladly give witness of what I believe is of evidentury value.
As you know I have now left Sprint and gone to a competitor. This after MANY years of devoted work as a Nextel then Sprint employee. THough I have just recently started, I am so far litterally amazed at the cultural difference in the organizations. I knew I was unhappy at Sprint, but in reflection I realize that I was just miserable and what a relief it was to leave that behind.
Sprint is in real trouble Ed. Their simply confusing plan will not be their saviour. Their media blitz (3 times average) of the new iphone clone will not save them either. The changes need to occur from within and that is not likely to happen in my opinion.
Though I try to make my predictions as literal as possible, there is information that I can not disclose even now due to prior confidentiality agreements, however I will make this prognostication for your readers. The nightmare with IPCS is going to hurt Sprint more severely than anything that has thus far occurred. One more prediction for you would be this. The first quarter earnings will be better than forecasted but this will be a temporary blip. Unless the new phone model somehow does wonders in June (which I predict it will not) then the second quarter earnings call will be an unmitigated disaster. Needless to say I will be selling my shares shortly after the Q1 call as I am expecting the stock to take a very brief bump upwards though I do not believe it will last.
Your statement "...fostered a culture based on fear for one's job security and having the right political connections over self-initiative" is so true. Legacy Nextel employees are taking over the company whether they're qualified or not. The recent restructuring just put more of the wrong people in the wrong positions and purged many good Sprint employees. Past job performance is simply not a factor! The latest news of Deutche Telecom possibly buying Sprint may finally rid the company of the cancerous management as T-Mobile's SOP is to have everyone interview for their jobs. Although, with most of the legacy Nextel employees working their 10am-3:30pm shifts, the decisions will be easy.
There are legacy Nextel people still left? If so, they can't be in engineering. We were systematically purged by Kathy Walker and her sychophants, Usry, Azzi, Yosick, et al. Legacy Sprint people didn't have to interview for their jobs. Selection was based on pedigree, nepotism and knowing the secret handshake. Oh, and you had to live in KC/OP. If you want to stay around, go for brown.
Sprint...stick a fork in them, they're done.
There's a problem with the systems. Sprint has this rebate pricing scheme in which you can have a 150 rebate off the price of a new phone once every 23 months. There's a glitch in the system that causes the rebate eligibility to be taken away in error.
The logical solution would be to FIX THE GLITCH. The second most logical solution would be to give access in the systems to correct the pricing... people call in, you click a button, problem solved.
Sprint did neither of these things... instead, they came up with a very complex "workaround" that sales support reps are expected to perform on an individual-case basis. At the same time, they started underbidding all the other customer-care type jobs in the area... we have Comcast, Qwest, Dish, and a bunch of others all paying higher! Basically Sprint is ending up hiring anyone with a pulse. When I started here with Nextel, you sometimes had to interview 3 times just to get a bottom-rung position and almost everyone in those positions had a college education or were in college. Now I'm working with people who are being picked up at jail to be brought to work and then taken back there at the end of the day or who are wearing ankle monitors!
...so you have an overly complex "solution" combined with people who don't understand or don't care about the job.
What outcome could one logically expect? This has been going on for over a year and I have heard of no plans to fix it. They simply threatened higher penalties to those who didn't perform the overly-complex workaround correctly. The main result was higher turnover rate of employees, resulting in a call center less able to perform the unnecessarily complex functions.
If you recalled all 4,000 employees laid off employees I believe you would have a great work force 1st of all. Next if you would look at cost savings money $$$,$$$,$$$ Sprint would save considering a reduction of vehicle leases that VP's, Directors Managers, and engineers, every employee who would like perk to benefit their pocket plus daily commuting to home. Consider pooled vehicle bases on a dept needs and only people who that really have business justification for vehicles such as field and wire line technicians who are living in the field. Not those that sit behind the desk all day and have no business need at all.
Count the cost savings for your per Sprint leased vehicles in you parking lot example: Lease $173 Lease Payment 2008 Ford Escape Term: 24 months Due at Signing: see dealer Program Plan: none Mileage: 10,500 miles/year plus $3.78 x 21 gallons equals $80 dollars a day x 30 days equal $2400 of gasoline per vehicle now due your own internal investigation consider how many vehicles that are being leased and reduce the vehicle count to the job need requirements not the luxury of commuting vehicle and free gas to each employee. Our stock price would be up and could bring a cost saving to our customers and would be able to recall it laid off work force.
If so want to let us know how long you been doing this??
On May 22 07:46 AM AllenHarkler oad wrote:
> Sprint overcharged my small (US) company for over $50,000.00. We
> caught them doing it and now they refuse to refund the over-payments.
> You can read the full story at sprint-really-sucks.co...