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Forsee out at Sprint, WiMAX strategy in question
Gary Forsee has resigned as Chairman and CEO of Sprint Nextel, putting into question the operator's $5-billion WiMAX plans. Sprint Nextel has been struggling quarter to quarter from churn in its core mobile-phone business, its poor integration of Nextel and its heavy spending on WiMAX. In particular, activist investor Ralph Whitworth has rattled the cage with management regarding its investments in WiMAX as well as what he calls poor attention to the company's core mobile-phone business.
In addition, credit-rating service Fitch Ratings says it's concerned about Sprint's lagging effort to switch subscribers from Nextel's iDEN network to its CDMA network and the cost of deploying WiMax.
Sprint tried earlier this year to alleviate concerns about its expensive WiMAX strategy by creating a partnership with Clearwire to jointly construct their WiMAX networks and eventually sell services under one brand. Rather than shuttering the business altogether, we could see Sprint looking to spin the business off or look for more financing. Certainly, Intel and Motorola have a lot banking on the success of WiMAX, and Sprint is single-handedly controlling the WiMAX ecosystem and forcing other service providers to look at WiMAX. Sprint also has to roll out something in the 2.5 GHz band to meet FCC rules.
For more on Sprint's WiMAX pressure:
- CNET covers Wall Street's WiMAX worries
- InformationWeek discusses Fitch Ratings' worries
Related articles:
Report: Sprint's board wants new CEO by Dec.
Investors lose confidence in Sprint CEO
Xohm Steals the Spotlight
Sprint outlines "Xohm" WiMAX plans
Do CEO ousters really help performance?
Comments (5) | Post a comment
Comments
Posted by Anonymous | October 11, 2007 - 1:17pm
Is it your opinion that the WiMAX strategy is in question? If so, why not be more accurate with your headline and say that you are the one who is questioning WiMAX. Or at least provide direct comments addressing your title as opposed to tangential insinuation comments.
Posted by Lynnette Luna | October 11, 2007 - 2:10pm
I think it's pretty clear that investors are questioning Sprint's WiMAX strategy, especially if you look at the articles below that link to this. Plus I think it's valid to generally conjecture that the business is in question given the fact that Forsee has pushed this project and who knows what a new CEO is going to do. I suppose I should have said "investors" question Sprint's WiMAX strategy.--Lynnette
Posted by Quemann | October 11, 2007 - 5:00pm
This article has been given a very partial view, particularly putting more weight on invesotr interest and customer care. But it has completely ignored the trasitional issues revolving around 3G and 4G, and more importantly, what this new technology will bring to the best interest of public. Pioneers are always isolated and disparaged by conservative investors who are focused on quarterly performances, but don't care about even a 2-3 years from now. Sprint's position is different than AT&T, Verizon and cable operators, and that's why Sprint has to stick with a make-or-break bet on WiMAX. Tech-savvy consumers, I believe, will support Sprint's aggressive move toward WiMAX. 3G is still voice-intensive with data service features, but 4G is data-intensive technology, which actually belongs to a next generation of mobile equipment that is different than the current mobile handsets.
Posted by Lynnette Luna | October 11, 2007 - 5:35pm
But you can't ignore the fact that the bottom line is what matters. It's unfortunate that a lot of initiatives that should have been given more time have ended because of shareholder pressure Ie, EarthLink pulling back on muni-WiFi. I certainly hope Sprint's WiMAX initiative isn't one of them, and I don't think that will be the case. I do think something will be done, however, to alleviate shareholder concerns, such as spinning off the WiMAX biz.--Lynnette
Posted by Anonymous | October 11, 2007 - 10:16pm
Would someone please slap the living daylights out of that whinny butt Ralph Whitworth. He sounds like the typical privileged A-hole that wants instant turnaround on his investment, instead of innovation that will bring 10x profits to the current status quo.
Well if the board at sprint bow to the pressures of a few and forsake WiMax, I believe sprint will lose a large portion of their customers. Without WiMax, HSDPA will clean up the market of high bandwidth users, and thus the future of the telco market. Maybe someone should see how much stock ralphy boy has in ATT.... maybe he is willing to loose some on sprint while cleaning up with those former/once again monopolies which also fail to innovate.
