During a recession, as deep, as long, and as wide as this one, we should be expecting to see revenue losses. Right now we are seeing revenue losses. However, we are seeing prepaid gains.
Sprint’s disappointing financial results for the three month period ending June 30, 2009 has many folks worried.
During a recession, some companies will do better than others. When you restructure a company you need to review a company’s performance against many different benchmarks. Sometimes the benchmarks are set by the competition. Sometimes the benchmarks are based on investor and creditor goals.
It is important to note that Sprint’s results to date are not great but they are not disastrous. Here is something to understand, Sprint is still undergoing a voluntary restructuring. Sprint needs to focus on two things in this restructuring – change and growth.
Part of the change has been the move to prepaid. Part of the change has been the Clearwire venture. Part of the change has been Clearwire partner Comcast’s move to WiMAX. What you need to keep in mind is we are looking at changes in the overall structure of Sprint and how it approaches wireless telecom, and all during a massive recession. If there is a merger between Sprint and another company it ought to be with Comcast.
As for the growth part that is coming slowly but it is coming. Sprint needs more time.
Sprint Nextel and Dan Hesse need to find a way or ways of growing the company even during this recession. Losing customers this year was not a surprise. Carriers do not rebound automatically. Sprint Nextel has problems bigger than most carriers.
I have not made any secret of my dislike for the Nextel network anchor around Sprint’s neck. However, Dan Hesse certainly made me eat my words. Hesse turned the problem into a positive. Meaning, Hesse focused the business into the prepaid sector, which I have always supported. Now that is smart turnaround work. It is not the spectacular headline grabbing change most analysts look for. Hesse’s move into prepaid demonstrated a deep understanding of the telecom space. Basically, the prepaid move was simply brilliant. More often than not, turnaround work is not about spectacular moves but rather it is about simple fundamental changes in the way the company does business. Hesse has been doing that plus peppering his work with headline grabbing moves like the Palm Pre. I was not thrilled with how the Palm Pre was handled by Palm or by Sprint but what is done is done. The problem with selling handsets is: what do you promote the handset or the carrier - it is a new chicken and egg problem in the carrier business.
If the recession continues well into 2010 followed by years of economic weakness, all carriers, including Sprint will need to find ways of surviving. There are a lot of “ifs” in the future. Dan Hesse needs to leverage all of the assets and relationships Sprint Nextel has; by the way he appears to have been doing all of this since he took over the company.
Since Hesse has taken over the helm of Sprint Nextel (I think it was December 2007), the company has had to deal with a long, wide, and deep recession. Frankly, Hesse has done a great job under the circumstances.
There is a shareholder lawsuit against Sprint Nextel at this time. I won’t comment on the suit. Other then press releases I have not read the complaint. For now Hesse needs to run the business. The lawsuit needs to be dealt with as well. Yes, Dan Hesse has his hands full.
What can save Sprint Nextel; more customers, different customers, different business focus, a merger? Maybe the answer is all those things.