Best turnaround CEOs of all time
Apple co-founder Steve Jobs
Apple's (NASDAQ:AAPL) Steve Jobs founded the company in 1976, was booted in 1985 and returned as CEO in 1997. By the time of his death earlier this month at the age of 56, he had transformed a company that was in such weak financial shape that it accepted a $150 million investment from Microsoft (NASDAQ:MSFT) into the most profitable technology company in the world. A consummate showman, Jobs was adept at explaining his vision to a mass audience and he built Apple into one of the world's most powerful brands.
Jobs' first major innovation was the introduction in 2001 of the original iPod and iTunes music store, which altered how digital music was purchased. In January 2007, after years of rumors, Jobs rocked consumer electronics with the introduction of the first iPhone, which has since undergone four successive overhauls. The device was not the world's first touchscreen handset, but its design and easy-to-use user interface became the standard for all smartphone aspirants, especially after the launch of the iPhone 3G in 2008 and Apple's App Store.
Jobs' reconfiguring of the smartphone market has also caused traditional players, from Microsoft to Nokia to Research In Motion (NASDAQ:RIMM), to reconsider and alter their own mobile strategies in the wake of the disruption caused by the iPhone.
In 2009, again after months of rumors, Apple introduced a tablet computer, dubbed the iPad, and got carrier partner AT&T Mobility (NYSE:T) to offer no-contract prepaid data with the device. Despite some initial skepticism that there would be a market for such a device, the iPad and its successor, the iPad 2, have sold extremely well and spurred competitors as diverse as Acer, Hewlett-Packard, LG, Motorola Mobility (NYSE:MMI) and Samsung to launch their own tablets. There are now more than 140,000 apps for the iPad.
Since he returned to lead the company in 1997 after a dozen-year hiatus, Apple has sold more than 314 million iPods, 129 million iPhones and 29 million iPads, according to data A.M. Sacconaghi Jr., an analyst with Bernstein Research, provided to the New York Times.
Former Ericsson CEO Carl-Henric Svanberg
Former Ericsson (NASDAQ:ERIC) CEO Carl-Henric Svanberg took over from Kurt Hellström in April 2003 when the company was at one of its lowest points. The stock market bubble that burst in 2000, coupled with a corporate restructuring, had left the company weakened and in disarray. Over the course of his tenure, which ran through 2009, Vestberg managed to build the Swedish vendor into the undisputed leading network equipment vendor in the world.
Getting there wasn't easy. Ericsson had lost billions of dollars--including $3.7 billion in the 12 months up to March 31, 2002, and had asked its own shareholders for $3 billion. Moreover, Ericsson cut tens of thousands of jobs--by 2005, the company had around 47,000 jobs, down from a peak of around 107,000 in the early part of the decade.
Svanberg's tasks and goals were clear: he needed to return the company to profitability, simplify the company's management structure, develop clearer communication, more professional marketing and sales and streamline the company's processes. Svanberg also invested in Ericsson's operator services business, which Svanberg saw as a growth opportunity. By the third quarter of 2003, Ericsson was back to profitability. As 3G HSPA rollouts accelerated, so did the company's profits, climbing in 2004, 2005 and 2006 and margins rose to unprecedented levels of more than 20 percent.
In 2005, Ericsson's managed services business, which Svanberg had pushed, started to talk off with deals to run the networks of 3 Italia and 3 UK, and Ericsson's scale began to give it more momentum in the managed services business. Ericsson also acquired Marconi in 2005, giving its fiber optic business a boost. Ericsson pushed into Silicon Valley with the 2006 acquisition of edge-router vendor Redback Networks and the 2007 acquisition of networking firm Entrisphere.
It wasn't all smooth sailing, however. An October 2007 profit warning led to a crisis and calls for Svanberg to step down. The company recovered and kept pushing ahead with plans to help deploy LTE networks, winning the first commercial contract order from Sweden's TeliaSonera in January 2009. Just as important was Ericsson's win, along with Alcatel-Lucent (NASDAQ:ALU), as the primary infrastructure vendor for Verizon Wireless' (NYSE:VZ) LTE network, establishing Ericsson as a premier LTE vendor. Svanberg announced in June 2009 that he would step down at the end of the year, but before then Ericsson made two major moves. The company inked a $5 billion network outsourcing deal with Sprint Nextel (NYSE:S), the first of its kind in the U.S. market, and also won the CDMA and LTE assets of bankrupt Nortel Networks for $1.13 billion, cementing Ericsson's CDMA position in North America.
Sprint CEO Dan Hesse
Sprint Nextel (NYSE:S) CEO Dan Hesse arrived at the company in late 2007 as it was in freefall, reeling from the tenure of Gary Forsee. One of the first and most prescient things Hesse did was simplify Sprint's rate plans by offering the company's "Simply Everything" plan in early 2008. Since then, simplicity has become one of the key brand values and identifiers for Sprint, which right now stands alone as the only Tier 1 wireless carrier still offering unlimited smartphone data plans to new customers.
Turning the company around proved extremely difficult, and Sprint lost 5.1 million subscribers in 2008, as wireless revenue fell by $3.1 billion, or 32 percent, as compared to 2007. Still, the company was making improvements, most notably in customer service, which had been one of Sprint's key weak points under Forsee.
In early 2009 Sprint's Boost Mobile brand shook up the industry and sparked a price war with its $50 monthly unlimited plan on Sprint's iDEN network. After acquiring Virgin Mobile USA in late 2009, the company re-tooled its prepaid offerings and launched a multi-brand strategy in May 2010 aimed at segmenting the market. Hesse effectively doubled-down (or quadrupled, if you want to think of it that way) on prepaid with the re-launch of Virgin Mobile as well as the launch of Assurance Wireless for low-income customers and Common Cents Mobile pay-per-minute brands. Prepaid remains one of Sprint's strongest growth engines. Sprint also launched its attractive "Any Mobile, Anytime" service, offering unlimited calling to any mobile number, regardless of carrier.
Slowly but surely, Sprint's subscriber losses began to slow down, starting in the fourth quarter of 2009 and continuing in first quarter of 2010. By the second quarter, Sprint had returned to positive subscriber growth for the first time in three years, largely on the strength of its prepaid offerings, though postpaid subscriber losses were decreasing. Sprint added the most net wireless subscribers in a quarter since 2006 in the third quarter of 2010, but still lost postpaid customers. The turnaround continued in the fourth quarter and Sprint added 1.1 million total net subscribers, including net postpaid additions of 58,000 subscribers--the carrier's first net postpaid additions since the second quarter of 2007.
Around this time Sprint selected Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung for its network modernization project, called Network Vision, the latest evolution of Sprint's network (the company inked a $5 billion deal with Ericsson in 2009 to outsource the management of its network). Network Vision is centered around multi-mode base stations that Sprint will use to deploy multiple radio technologies, and the plan will allow Sprint to shut down the iDEN network starting in 2013.
In 2011, continued postpaid subscriber losses have leavened overall subscriber gains, but Hesse's biggest coup was finally getting Apple's (NASDAQ:AAPL) iPhone for the Now Network. The company's Network Vision plans, which will allow Sprint to deploy LTE by mid-2012, and move away from 4G dependence on WiMAX provider Clearwire (NASDAQ:CLWR), still need to be ironed out.
Hesse's tenure has been bumpy. Sprint's reliance on Clearwire for the deployment 4G turned out to be a sour bet when the company lost its first-mover advantage to Verizon Wireless' (NYSE:VZ), and subscriber growth has been uneven. However, Sprint's customer service have improved every quarter Hesse has been at the helm. In addition, he returned Sprint back to positive subscriber growth and is moving it forward with its upcoming LTE deployment. Without doubt, the company is in a better place now than it was prior to his tenure.
Motorola Mobility CEO Sanjay Jha
Motorola Mobility (NYSE:MMI) CEO Sanjay Jha, joined Motorola in 2008 and has turned around the company's flagging handset business. Jha essentially bet Motorola's entire handset business on Google's (NASDAQ:GOOG) Android platform before it was clear that the operating system would turn into the juggernaut it has become.
Jha helped position Motorola's Droid as the flagship phone for Verizon Wireless' (NYSE:VZ) initial Android push. He also has lined up AT&T Mobility (NYSE:T), Sprint Nextel (NYSE:S) and T-Mobile USA to offer Motorola Android devices. Although Motorola has relied on Verizon for a large chunk of its revenue, the handset maker has steadily built relationships with the other carriers, which have launched flagship Motorola products of their own, including the Atrix and Atrix 2 at AT&T and Photon 4G at Sprint.
Under Jha, Motorola has also improved the handset unit's financial results. The division grew its smartphone shipments and narrowed its operating loss in each of the first three quarters of 2010, and Jha returned the handset unit to profitability (on a non-GAAP basis) one quarter ahead of schedule. In the fourth quarter of 2010, Motorola posted net revenues of $3.4 billion, up 21 percent from the fourth quarter of 2009. The vendor's earnings clocked in at $80 million, a reversal of the $204 million loss it reported in the year-ago quarter.
In 2011, Jha unveiled the first Android Honeycomb tablet, the Xoom, and while the device was certainly not a breakaway hit compared to Apple's (NASDAQ:AAPL) iPad, it sold a respectable 250,000 units in the first quarter and 440,000 units in the second quarter. However, Jha's biggest coup was getting Google to pony up $12.5 billion to buy out Motorola. Google has said it will run Motorola Mobility as a separate business, and after the deal closes it will break out Motorola' s results separately. The deal is even more impressive considering Motorola maneuvered Google into raising its bid price 33 percent before Google eventually settled on the $12.5 billion price tag, according to a regulatory filing.
Former Nextel CEO Tim Donahue
Longtime wireless industry executive Tim Donahue joined Nextel Communications in January 1996, shortly after wireless pioneer Craig McCaw and his family became significant investors in the company with $1.1 billion in investment. Founded as Fleet Call in 1987, Nextel initially focused on fleet management, and had been steadily growing through mergers with OneComm and Dial Call. However, with the September 1996 introduction of Motorola's iDEN push-to-talk technology, Nextel took on a whole new identity and meaning.
Nextel began expanding its coverage and by October 1997 had 1 million customers; by the following June it had 2 million subscribers and by October 1998 it had achieved positive cash flow. The introduction of the i1000 flip phone, with a speaker phone and transparent flip cover, gave Nextel an iconic PTT device. In July 1999 Donahue became CEO of Nextel, just months after it recorded its 3 millionth customer. Under Donahue, Nextel recorded nine straight quarters of positive net income, and through the introduction of services like two-way messaging in 2000, began steadily picking up even more customers, reaching 6 million subscribers by the third quarter of 2000. In August 2001 Nextel launched its Nationwide Direct Connect service and by the end of 2001, Nextel had 8 million customers and served the top 100 markets in the United States.
Throughout 2002, Donahue pushed Nextel to introduce more advanced phones, including its first phone with GPS and the first PTT BlackBerry device from Research In Motion (NASDAQ:RIMM). In 2003, Donahue raised the company's profile even further by having Nextel sponsor NASCAR's premier racing series. In September 2003, Nextel and Nextel Partners announced the full availability of Nationwide Direct Connect across the continental U.S. and Hawaii ahead of schedule. Nextel's aggressive moves in the wireless industry pushed Verizon Wireless (NYSE:VZ) and Sprint to launch their own PTT offerings in 2003, however those offerings were never considered on par with Nextel's service.
In December 2004, Donahue maneuvered Nextel into a blockbuster $35 billion merger with Sprint. The deal merged a traditional cellular company in Sprint with one that was geared more toward enterprise and public-safety workers in Nextel. In hindsight, the challenges of integrating two different networks (CDMA and iDEN), cultures and companies proved to be far more difficult than either company likely imagined, and the deal wound up being one of the worst wireless mergers of all time from a financial perspective. In February 2008, Sprint wrote down $29.7 billion of the $36 billion it paid for Nextel. By the time he stepped down as chairman of Sprint Nextel in 2006, the company was already beginning a downward spiral. However, Donahue deserves credit for building Nextel in the aggressive company and wireless challenger it became.