Pension Plan investor criticizes Dan Hesse; Sprint's board still supports CEO

Pension Plan investor criticizes Dan Hesse; Sprint's board still supports CEO
Did the future ever shine brighter for Sprint than at CES 2009 when Palm took the wraps off the Palm Pre? But we all know how that story ended and since then, the nation's third largest carrier has also found itself mired in a number of questionable activities. Sprint faces a giant hit on its Clearwire investment. Very soon, Sprint will have a conclusion to the LightSquared fiasco that will eventually end with a broken contract between the two firms. And while it should prove profitable in the end, some question Hesse's $15.5 billion investment in the Apple iPhone.

Some investors have been vocal with their criticism of Hesse. According to Monday's Wall Street Journal, Dragos Stefanescu, a director for the Ontario Teachers’ Pension Plan, criticized Sprint's complicated network plans at a lunch meeting in Boston last year. Meanwhile, sources for the WSJ say that the carrier's board still has Hesse's back although they still will second guess him when necessary. This was the case with the alleged offer by Sprint to buy MetroPCS for $8 billion. The speculation is that Hesse had signed off on the purchase and was all set to make the announcement when the Board decided not to move ahead with the deal.

According to the Journal, Hesse has started comparing his efforts to turn Sprint around to to Ernest Shackleton’s struggle to keep his crew in Antartica alive about 100 years ago. This might not have been the best of choices for Hesse to use as a comparison because while Shackleton and his crew managed to survive, they never met their goal of  reaching the South Pole. Not a good sign for the beleaguered executive trying to turn around the carrier.

source: WSJ (subscription req'd) via BGR

Read more here: http://www.kansascity.com/2012/03/13/3488136/sprints-board-backing-hesse-but.html#storylink=cpy

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19 Comments

1. theBankRobber

Posts: 682; Member since: Sep 22, 2011

I have seen the commercial for the IPhone on Sprint with unlimited data more times then I have seen ANY commercials for any other phone since the launch of the HTC Evo 4G. Sprint is just wasting money left and right on horrible decisions that only cause damage to there customers because they need to raise prices to off set the debt they put themselves into. That's my opinion.

3. 14545

Posts: 1835; Member since: Nov 22, 2011

I don't disagree with advertising, as you typically get your biggest gains from advertising. But, 15.5 billion on the iPhone will probably sink them. As I said below, I don't think it will lead to a net subscriber gain worth mentioning. Their whole existence is based off of being a "budget" carrier, so that's whats going to sink them, since they have to pay for that contract one way or another.

8. Lucas777

Posts: 2137; Member since: Jan 06, 2011

the thing is, sprint doesnt have the opportunity not to be risky… tmobile has become the more budget friendly carrier, and they are not doing to well.. the iphone creates a huge base for sprint which is exactly what they need, since att and verizon will continue to grow while tmobile does not i do think lightsquared and clearwire were too much at once though...

11. htc_prep

Posts: 303; Member since: Oct 09, 2009

Although 15.5 b is quite a pretty penny for a series of devices I don't care for they will make money on return in the long haul since carriers don't make a profit off of customers until 22 months its crazy now but in about 16 months it should make sense. Also being a Sprint Android user I appreciate the fact they paid up front instead of bumping up top tier Android phones an extra 100.

2. 14545

Posts: 1835; Member since: Nov 22, 2011

Honestly, instead of wasting money on the iPhone, which I'm sure won't make them more money in the long run, they should have invested more money in getting LTE up and running sooner. And dump Clearwire for gosh sakes. (and before somebody gets mad about the iPhone comment, I say that because of the cost to the carrier, which for the most part is only going to be from their current customers who switch from another platform. I seriously doubt the phone itself will cause an increase in net subscribers to sprint service. Therefore, waste of money on sprints part.) Then what money they didn't put toward LTE should have been put toward increasing their service area. Put another way, increase their national reach. But hey, I'm on verizon, so what do I care.

5. threeline

Posts: 313; Member since: Sep 11, 2011

I think I ready to pay the extra money for reliable service, some 4G speeds, and LTE over at VZW. Sprint never really got 4G off the ground in PHX but I hear its a couple of places here, I guess not where most of city's population live or work. I barely get 3G signal these days. Now we are waitng on LTE service and LTE devices from Sprint, I won't hold my breath.

9. lsutigers

Posts: 832; Member since: Mar 08, 2009

I understand your frustration as I share it too. After reviewing www.s4gru.com it is clear Sprint is quickly moving their nationwide Network Vision / LTE deployment. The first round of NV / LTE markets should be ready this summer (Q2/Q3) and the second round should be live by the end of the year. I am going to stick it out, I get awesome voice, decent 3G, and great WiMAX 4G service. By this time next year we should have LTE in Florida and with Network Vision, voice coverage will be greatly expanded, which is good but not currently a problem for me, and 3G speeds will be upgraded to ~2.5 - 3 mbps. My biggest concern with going to VZW is data caps, oh and price too.

14. atheisticemetic

Posts: 377; Member since: Dec 18, 2011

you would really use 4 gigs of data in a month?

17. archangel9

Posts: 233; Member since: Feb 07, 2010

I agree! Sprint did make the mistake of not going LTE first but went WIMAX but it's going to pan out in the long run.go towww.clearwire.com/LTE to check out details.Only thing I want is for better signal penetration through buildings but here in Miami enhanced 3g haven't reached here yet but I'll be glad when it does. Verizon coverage is great but their plans and data caps is ridiculous as well as ATT.I'm glad I switched to the Now Network.

7. lsutigers

Posts: 832; Member since: Mar 08, 2009

The reality is only time will tell. While the $12.5 billion causes a bit of a sticker shock, most investors agree that the iPhone is a good long term investment for Sprint. The initial investment indeed is astronomical for a phone, but, in a highly competitive market, you have to offer what your customers want, or sometimes, what your competitors offer. Needless to say, the iPhone is hugely successful, beyond anything Apple ever imagined and Sprint is tagging along for the ride just like AT&T and Verizon did. Again, most analysts and investors do agree that this was a good move for Sprint and they should see a return in their investment around 2014 - 2015.

16. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

This will either make or break Sprint. I feel the iPhone is a great device period, but in America most people that wanted it have it. Sprint didn't seem to get massive "Sprint" customers to overwhelmingly buy the iPhone like AT&T. While they added new customers they lost a lot of customers to LTE carriers like Verizon. When people join Sprint they join for value, at this point; However no LTE, and failing signal service in some areas is crippling Sprint right now. I almost left last year because of poor service during their tower upgrades here in NYC that seem to cause coverage black outs that are happening all over the US. These upgrades cause disruption and slower speeds causing people to leave because Sprint fails to tell the truth about the upgrades and rather to credit you for poor service, or give perks for poor service that you are paying for while they upgrade towers, they seem to be ok with letting these people leave for Verizon or AT&T rather than to tell them its growing pains or issue disruption credit. Tey told me I could leave without contract penalty because of the dropped calls, and red circles of LOS I got with my Photon, but also told me they had tower upgrade growing pains that was the reason for LOS, and assured me this would pass so I decided no to go to Verizon for this temporary set back, and service finally is back like it was. Not having LTE seems to be blocking them from even selling the new soon to be released iPhones that are alleged to be LTE. Verizon, and AT&T will be selling a phone that Sprint contracted to sell 15 billion dollars worth yet they aren't even participating in the launch in a few days.... that's insane. My fear is that Android hand sets like the Galaxy3, GN, HTC X series, are great phones that will gnaw at iPhone sales. Even though iPhones are great I will never own one; However I would get a Windows phone. I left AT&T within a few weeks after Sprint 1st open the doors for value pricing, and they have had hit or miss issues, but today they still have good value plans if you can get past the LTE issue that should be solved with in a year. I feel a year from now they should have a lot more to offer to all that wait patiently. I only get 4g when in NYC but at home I have wifi so that matters not that much at this time

4. AbsentbebniM

Posts: 21; Member since: Feb 09, 2012

For once, I have to agree with all the comments placed ahead of mine (from @theBankRobber and @14545). I can see where you're both coming from. I actually switched from Verizon to Sprint this past fall. Not for the iPhone I eventually bought, but for their lower cost and quality gains (at least in my small piece of the world). Things can really go many different ways for Sprint from here on out, but I have a lot of faith on their current CEO. If someone would've told me a year ago that I'd be singing the praises of Sprint today, I'd've called them nuts. Then again, I was a hardcore Alltel person, so I guess that was a crapshoot either way.

6. Slammer

Posts: 1515; Member since: Jun 03, 2010

This is the problem with corporations. They rely heavily on not only catering to customers, but also their shareholders. The problem here is that most shareholders have no business sense. They only care about short term financial gains. With this said, I don't think anyone realizes the immense progress Dan Hesse has made in trying to turn around a corporation of this nature. The industry is highly influenced and controlled by the two largest carriers. Every effort has to be taken to ensure that they remain competitive. Dan has a tough road. The iPhone is inherently controlled by Apple on Apple's terms. It's their way or the highway. Sprint needed to make a decision on whether the iPhone was to be added. Without argument, if Sprint stayed clear of it, their consumer base would've further decayed. Sprint's decision to go WiMAX, was the only decision that could've been made. If it didn't make use of its spectrum holdings, Sprint would've had to forfeit the holdings. LTE was not ready at that time. So again, people need to back off on these two directives. On a personal note, I have not seen anything but good results since the inception of Dan Hesse. It's a double edged sword when dealing with both future company planning and immediate shareholder dividends. John B.

10. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

No worries mates, eventually Verizon will end up purchasing Sprint. No how, no way can the company which purchased Nextel will survive, is just a matter of time.

12. -box-

Posts: 3991; Member since: Jan 04, 2012

Sprint has a long track record of shooting itself in the foot, whether to please investors or line the boardmembers' pocketbooks, it just keeps happening. Nextel. iDen. WiMAX. Clearwire. Lightsquared. iPhone. All huge financial outputs with poor return on investment and little to show for it, or in the case of Nextel, iDen, and WiMAX/Clearwire (and possibly LightSquared), soon to be nothing at all to show for it. Which leaves the iphone and the plans to scrap the ENTIRE EXISTING NETWORK to replace it with supposedly better 3G (and admittedly Sprint has the worst of the 4 major carriers for signal strength, structure penetration, and coverage, so it can't get much worse) and LTE. In short, Sprint's shot itself so much in the foot they're using peglegs and those are made from rotten bug-infested driftwood. They'll need some quality prosthetics or they'll be going nowhere fast

13. danwatson

Posts: 117; Member since: Jan 03, 2012

I agree. As a Sprint customer it is downright frustrating to watch. If I didn't have a a significant discount in my sprint plan, I would be jumping to Verizon. I have the Evo and have been waiting earnestly for a new 4G phone based on new & working technology after seeing how worthless wimax is (even in an area where wimax coverage supposedly exists). It has been a LONG waiting game as sprint tries every company & technology in the book before getting it right with the standard LTE network. Sprint wants to be unique and different but they are too small for that. Stick with what works and compete on price please.

18. 14545

Posts: 1835; Member since: Nov 22, 2011

This was my point. They will have to pay for the iPhone in the long run, and those costs are going to be though greater plan prices, which will cause them to lose their current base for the sake of trying to compete with VZW/ATT which they clearly aren't on level playing ground. Thats the reason I say the iPhone was a dumb move overall. Once they pay for it, their base will have moved on because they aren't going to want to pay VZW/ATT prices for Tmo level of service. I sincerely hope it does work out for them, because the last thing we need as consumers is for sprint, another national carrier, to go the way of the dodo. Because it will just go to helping VZW/ATT raise their prices due to lack of competition.

15. atheisticemetic

Posts: 377; Member since: Dec 18, 2011

sprint is just awful....they were awful 2 years ago, and they are still awful today. i applaud them for trying, but they just have a horrible network base and customer service. their "truly unlimited data" isnt truly unlimited

19. lsutigers

Posts: 832; Member since: Mar 08, 2009

Dude that is simply not true. There are plenty of happy Sprint customers. Do you even have Sprint, how do you know? Right now Sprint is upgrading their networks to provide better service. I for one dont have issues with Sprint at all and my employer recently switched a ton of lines from VZW to Sprint and they have no problems either. Just because you hear a bad Sprint story here and there doesn't make them a bad company. They are doing more in terms of network improvement than any other carrier at the moment.

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