Following up on my posting (www.pjlouis.com) “2010 – A Critical Year for Sprint Nextel”. Recently (December 2009), Dan Hesse, CEO of Sprint Nextel, spoke at the final keynote session of UBS’ investors conference. Hesse acknowledged the Sprint Nextel’s struggles in the last year. Hesse’s view is that the company making slow progress in terms of improving the network.
The recession has hurt businesses and people. It has hurt Sprint Nextel. It has hurt Verizon Wireless. It has hurt everyone. However, the recession has also leveled the playing field in the competitive battlefield.
The recession has bought Dan Hesse the time he needs to turn around Sprint Nextel. It looks like he is fighting for the company’s life; looking at even the AT&T-Verizon lawsuits as a positive event for Sprint Nextel. In my opinion he is fighting for Sprint Nextel’s life; and I am guessing he feels that way as well.
Questions have been floating regarding the Sprint’s investment in Clearwire. I had questions regarding the wisdom of the investment. I finally came to the conclusion the investment was a good idea for Sprint Nextel’s long term plans but the idea required time to execute and still requires time to execute. The question is whether or not Sprint will be given time by Wall Street.
As I write this, Clearwire has announced its willingness to support LTE. So, now if I were an investor in Clearwire, I would be asking the question: “I just spent billions investing in you as a WiMAX carrier and now you want to install LTE compatibility”? A few years ago I had noted that the fundamental RF characteristics of LTE and WiMAX were the same and hence a single network could serve as an interoperable platform for the industry. Think wholesale carrier. I thought the idea was sound in 2007 and I still do. However, that does not address the issue from the investors’ perspective. People do not like spending billions on something unless they clearly know what the money is being spent on. Then again if the investors have always known Clearwire would make overtures to the LTE community that is a different story.
In the end how does Clearwire’s plan help Sprint Nextel? Sprint could leverage the Clearwire network and still make money off of the LTE community that uses the Clearwire network. Sprint needs to move out of the firefighting mode and into attack mode now.
The ideal solution for Sprint Nextel would be a merger between it and Comcast. As I have said frequently in past blog postings, on my own site and other sites, a merger between the two would present a powerful competitive threat against carriers like Verizon and AT&T.
Sprint is beginning to look as if it will need to pull a rabbit of its hat. When company’s like Google introduce the Nexus One and you do not hear the clamor of the industry press talking it up. When you see that the Nexus One is nothing more than an incremental improvement over existing smart phones you realize the industry has become either so jaded over the notion of smart phones or so use to the discussion that only people in the industry give a hoot and not the consumers.
What is Sprint to do? Will introducing another handset even matter to Sprint? Will Sprint need a game-changer? I think so.