Sprint (NYSE:S) said Monday that Chief Executive Gary Forsee is stepping down, effective immediately. Is the stock a buy now?
Forsee, who has also served as chairman and president, has come under fire as telecommunications giant Sprint's subscriber growth and share price have disappointed investors since 2003. The last straw was today when the company announced it expects to report a net loss of approximately 337,000 post-paid subscribers in the third quarter.
Paul Saleh, Sprints current CFO, will serve as acting CEO until a permanent replacement is named. Saleh, 50, has served as chief financial officer since the merger of Sprint and Nextel. Prior to the merger he had been EVP and CFO for Nextel since joining the company in 2001. Before joining Nextel, Saleh was SVP and CFO at Walt Disney International from 1997 to 2001, and also served as SVP and treasurer for The Walt Disney Company. Prior to Disney, Saleh served as treasurer of Honeywell, where he spent 12 years in various leadership positions in finance, treasury, investor relations, strategic planning and operations.
Last week, The Wall Street Journal reported that the company has been actively seeking a replacement for Forsee, who has served since 2003. That news followed a report in the same newspaper that activist investor Ralph Whitworth had lost confidence in Forsee, and was threatening a proxy fight for board seats unless Sprint dealt with the situation "immediately." Whitworth is best known for ending the reign of Home Depot's (NYSE:HD) Robert Nardelli, only to watch the stock price tumble.
Why is this a good thing? Aside from Forsee's departure, Sprint did say the search for selecting its next chief executive "will focus on candidates outside the company," said Hockaday. "We fully expect that the search will be concluded in a timely manner and we are focused on selecting the right candidate to guide the company to achieve its full potential. Sprint Nextel has the assets, spectrum, customer base and technology to be the leader in wireless mobility services." said non executive chairman, Irvine Hockaday.
This means that Sprint is looking to change the culture and bring in fresh ideas to the company currently suffering an abysmal deterioration of customer service rankings for almost three years running now. If you are a shareholder (I am not) this can only be good news for you as without it, your investment is going nowhere except maybe down.
As for buying shares? Not yet. Let's wait to see who takes over and what their plans are first. Unless he or she makes customer service priority one, expect more customer defections and further deterioration of share price.