As Expected, Sprint Chairman, CEO Forsee Steps Down

Oct 09, 05:00 AM

Current Headlines: By Leslie Cauley

NEW YORK -- Sprint Nextel Chairman and CEO Gary Forsee on Monday resigned, as expected, paving the way for the board to recruit an outsider to lead the troubled wireless giant.

In a prepared statement, Sprint said two executives -- James Hance Jr., a board member, and Paul Saleh, currently Sprint's chief financial officer -- would become non-executive chairman and acting CEO, respectively, until a permanent successor could be found.

Spokeswoman Leigh Horner said Forsee was not available for comment.

Sprint has been under a spotlight since last week, when The Wall Street Journal reported that the board was quietly searching for a new CEO. The news riveted the telecommunications world, forcing Sprint to lay out its plans.

The news was released in tandem with more bad news for investors: Sprint said it now expects to report a net loss of approximately 337,000 subscribers in the third quarter. In addition, the company said, consolidated revenue for 2007 would be slightly below the range previously provided to Wall Street.

The bad news grind has become familiar for beleaguered Sprint investors. Since merging with Nextel in 2005, their shares have lost about 27% of their value. The combined company has continued to lose customers, a problem that Forsee, despite more than a year of trying, was unable to fix.

Comparisons with rivals AT&T and Verizon Wireless didn't help. Both continue to add more than a million subscribers a quarter.

Sprint's board didn't explicitly blame Forsee for the poor financial performance, but they also didn't mask their dissatisfaction.

In a statement, board member Irv Hockaday said the decision to seek a new CEO "was based on the board's belief that it is the right time to put in place new leadership to move the company forward in improving its performance and realizing company objectives."

In a two-sentence mention, Hockaday offered thanks to Forsee on behalf of the board for his "dedication and leadership" since becoming CEO in 2003.

For the next CEO, he said, the board would focus on outside candidates.

Forsee, a seasoned telecom veteran, is leaving Sprint with a collection of assets that will prove valuable as the global wireless wars continue to heat up, says Roger Entner, a senior vice president at IAG Research.

"Ultimately, wireless is a size game," Entner says. "Gary (Forsee) is the one who bought Nextel and made Sprint the third-largest carrier" in the USA with more than 54 million customers.

Forsee's biggest failure, he says, was not anticipating the difficulty of integrating Sprint and Nextel. The two companies' networks are technically incompatible, which led to a host of customer care issues. "Either he couldn't see or he underestimated the problems that came" with Nextel. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.