An activist shareholder is getting ready to spar with Sprint Nextel's management, according to an article published Thursday by The Wall Street Journal.
Ralph Whitworth has quietly been building a stake in the company worth about $500 million, or nearly 1 percent, the article said. Whitworth is amassing shares in an effort to convince Sprint's management to pull back on some of its capital-intensive projects, such as its plan to build a nationwide WiMax network. He also wants Sprint to sell off its fiber-optic networking business and long-distance operation, the article went on to say, quoting sources close to Whitworth.
The Journal also noted investors have not been happy with Sprint or its CEO, Gary Forsee, for several quarters as the company's shares have steadily lost value since the August 2005 acquisition of Nextel.
Shareholder activism seems to be in vogue lately. In January, after Motorola reported disappointing fourth-quarter earnings, billionaire investor Carl Icahn started buying up shares in the company to amass a big enough stake in Motorola to run for a board seat. Motorola's management and board of directors has urged shareholders not to vote for Icahn. That said, Motorola has started to allocate more money to its share buy-back program, one of Icahn's main suggestions for the company.
It's still too early to tell if Whitworth's efforts will bring about any change in Sprint Nextel's strategy. But according to The Journal, Whitworth has led other successful shareholder coups. Last year, he assembled a group of dissident shareholders to take on management at Home Depot. In February, Home Depot's CEO resigned and the company agreed to give an associate of Whitworth a board seat.
So if I were Gary Forsee, I'd watch my back.