Sprint's CEO could get the boot
Wall Street Journal reported Thursday that the company is looking for a new CEO. So if Gary Forsee gets the boot, what will happen to his pet project--nationwide WiMax?
It looks like Sprint Nextel's CEO Gary Forsee will soon get the boot, which could spell trouble for the company's WiMax network.
According to a story published by The Wall Street Journal late Thursday, the company's board of directors is fed up with Sprint's poor performance and they're laying the blame on Forsee and company.
The story didn't identify sources by name, but referred to "informed people" who said the board of directors had already launched a search for a new CEO in August. Several high-profile candidates have been approached for the job, the story said. And at least one has declined the offer. The board hopes to announce a new CEO by December, the story said.
CNET News.com contacted a Sprint representative, who declined to comment on the story or rumors that Forsee is being forced out.
Pressure has been mounting for months as investors become increasingly more agitated at Sprint's poor performance. Since Sprint acquired Nextel in 2005, making it the third largest cell phone provider in the U.S., the company's stock has declined roughly 27 percent.
Earlier Thursday, The Wall Street Journal reported that activist investor Ralph Whitworth said he had lost confidence in Forsee and was prepared to launch a proxy fight unless Sprint's board of directors did something. Whitworth owns about 2 percent of the company's outstanding stock.
Whitworth and others are disappointed with Sprint's inability to increase its subscriber base as fast as its competitors Verizon Wireless and AT&T.
One of Whitworth's biggest beefs with the company is its plan to build a nationwide high-speed wireless network using technology called WiMax. Whitworth told the WSJ that he felt this plan detracted attention from Sprint's issues in its core business.
Sprint has already committed to spending $5 billion by 2010 to build the network. And it's signed a deal to partner with a company called Clearwire to bring WiMax to even more cities. The two companies predict that together, by the end of 2008, they will offer mobile WiMax network access to about 100 million people.
But what happens if the new CEO pulls the plug on the Wimax plans? It's certainly a possibility. Just look at EarthLink. When the company's new CEO took the helm earlier this year, he wasted little time abandoning the company's ambitious citywide Wi-Fi plans. Within months, the company started backing out of its contracts.
While the issues surrounding Sprint are different, it will be interesting to see what becomes of Sprint's WiMax strategy when the leadership eventually changes. Will it survive, or will it wither and die as the company attempts to focus on its core business?