Sprint’s CEO sees 2014 rebound after beating Apple shares

Pin-Drop Clarity

Sprint gained renown as an upstart long-distance competitor in the 1980s, when it touted a fiber-optic network with pin-drop clarity. After shifting its focus to the wireless market, the company pursued the Nextel Communications Inc. acquisition in 2005. Gary Forsee, then CEO, saw the deal as a way to compete with the industry’s big two -- AT&T and Verizon. Instead, network glitches and customer-service complaints put Sprint further behind.

Nextel’s network had 16.1 million customers when it was acquired. That number had plunged to 4.4 million as of June. In 2007, less than three years after the Nextel deal, Forsee was forced out by the board and Hesse was hired.

Forsee, who served as president of the University of Missouri for three years after leaving Sprint, declined to comment.

Three Stages

Hesse, a lanky 58-year-old who prefers to work in jeans, said he’s orchestrating Sprint’s turnaround in three stages. The past four years have been a recovery period. This year and next, he said, are the investment phase. That’s when Sprint dismantles the outdated Nextel network and installs LTE technology.

“Right now, we are spending money like crazy revamping the network,” he said. Adding to the costs are the heavy iPhone subsidies -- an expense to acquire lots of customers that will “pay off longer term,” he said.

Stage three will be Sprint’s growth phase, when these improvements begin to flow to the company’s bottom line. Sprint will see profit-margin expansion and earnings growth in 2014, Hesse said.

Sprint’s shares have beat the S&P 500 by 123 percent this year. Before 2012, the stock had underperformed the index by 86 percent since the beginning of 2007.

<< Page 2 of 3 >>

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome