Sprint seeks new CEO to replace Forsee: report
NEW YORK (Reuters) - Sprint Nextel Corp (S.N) has begun searching for a replacement for Chief Executive Gary Forsee, the Wall Street Journal said on its Web site on Thursday, citing sources familiar with the matter.
The report comes amid growing expectations of a management change at the number-three U.S. wireless carrier, which has struggled over the past year with customer defections and technical problems.
Activist shareholder Ralph Whitworth earlier said he has lost faith in Forsee and threatened a proxy battle unless Sprint dealt with its leadership.
Sprint declined to comment. Its shares had risen as much as 4 percent earlier on Thursday, before closing up 2.8 percent.
The Journal said Sprint board members were dissatisfied with Forsee's performance and began "quietly" looking for a new leader in August.
The board hopes to announce by early December a new CEO who is likely to come from outside, the Journal said, adding that some "high-profile industry veterans" have been approached.
"It's hard to argue that he's done a good job," Stifel Nicolaus analyst Chris King said earlier on Thursday, referring to Forsee, who is also Sprint's chairman. "Rightly or wrongly the stock would react positively if a management change occurred."
Sprint's shares have lost more than a quarter of their value since April 2006 due to customer losses and difficulties integrating its 2005 Nextel Communications purchase.
In August, the company posted slight improvements in customer growth for the second quarter, but upset investors by warning these could be short lived as it saw more defections for the third quarter.
Sprint, which has had success selling Web-surfing and music download services to cell phone users, is seen by analysts as among the most vulnerable carriers to losing customers to AT&T Inc (T.N), the exclusive U.S. service provider for Apple Inc's (AAPL.O) iPhone.
STRATEGY CHANGE
Whitworth told the Journal in an interview published earlier on Thursday that he wanted the board to deal immediately with the company's leadership. He also questioned Sprint's investment in the emerging WiMax technology and urged Sprint to sell its long-distance network.
A representative for Whitworth's Relational Investors LLC confirmed the accuracy of the Journal report. Relational has increased its holding in Sprint to about 53.1 million shares, or roughly 1.9 percent of the company, up from the 32 million shares it held on June 30.
Whitworth is known for taking big positions in companies where he perceives weaknesses. His pressure on Home Depot Inc (HD.N) led the company to reverse course and look at selling a key asset. A principal of his firm also won a board seat at the home improvement retailer.
Other Sprint shareholders have been upset about its plan to spend $5 billion by 2010 on WiMax, a next-generation high-speed wireless technology that is so far unproven commercially.
While Sprint has regulatory requirements to build a network using the spectrum it has pegged for WiMax, its spending plans go beyond requirements, said John Krause, an analyst at Thrivent Asset Management, which manages roughly $68 billion and holds 750,000 Sprint shares.
"To be overly aggressive in a new venture like WiMax without really stabilizing the base business is irresponsible," Krause said. "If they're going to continue down that path, investors will be upset and investors are going to ask for a change in management so they can get a change in strategy."
Thrivent has cut its holding in Sprint roughly in half.
"The strategy needs to be changed," Krause said before the Journal report on the board. "Execution needs to be changed. Due to those things, it appears management needs to be changed."
(Additional reporting by Ritsuko Ando and Lewis Krauskopf)
