Sprint's turnaround plan complicated by iPhone, economy

about 1 million subscribers churn off the nextel network per quarter. At that rate, there will be no more nextel subscribers in 4 years.

Heese's bigger mistake was not valuing the irreplaceable assets that he had. He squandered them away uselessly and now the pigeons are coming home to roost so to speak. Obviously I am referring to the Nextel employee base. After the merger (and continuing through Hesse's reign of ineptitude) Nextel employees have left (many not by choice) in droves. These were the folks that understood key dfferentiators such as direct connect. They understood the value of the Java based phone being the first to market with one. They understood the impact of data on the handset and how to properly position that functionality. They knew how to sell on value instead of price which is why they had the highest ARPU in the industry. Interestingly enough, ATT and Verizon have successfully made a very focused effort at hiring former Nextel staff that Sprint dismissed with such disdane. The results are obviously reflected in the numbers.

Like you I don't understand why Sprint's PCS business lost so many customers. With Nextel for sale, that side's loss should have been expected. Sprint though lost a similar amount. In terms of useage, Sprint Instinct owners "hit" the internet more than iPhone users (iPosers? iPhonies?).

At the present rate of customer loss, Sprint will be out of customers somewhere around 2018. In spite of the discouraging fundamentals upon which you so eloquently dwell, Sprint strongly improved its financial position paying down debt and raising cash. Besides that ARPU went up. Not so bad.

IMHO, Sprint has a bunch of assets worth more than the stock price

Hesse has not been there long enough to do this. Forsee and Sprint's miserable board oversaw the destruction of Nextel's awesome teams and cultures.

Dan Hesse was the wrong choice for the CEO position. These guys should be focused like lasers on sales, marketing and customer service. Instead we read about closing employee cafeterias to save money.
Ans his marketing campaign has no message. Verizon touts the network and AT&T has more bars, what's his message and strategy to attract customers to the brand?

Sprint's problems begin at the ground floor. This company does not know how to treat their present employee base. If you want to make a difference then make a difference with your employees instead of treating them like s separate entity. Sprint has more problems than they can handle, phones are not making a difference, network is not helping either. I do admit they do have the best network and data applications to support this claim. The new generation of push to talk phones will make or break Sprint. If they don't get a grip on this and correct the initial problems users are experiencing with these devices they are headed for more churn.

They desperately need to embrace the G1. Spring has horrible handsets. Market laggards.

Sprint could have mega customer loss this quarter, with new Blackberry devices on VZW (Storm) and ATT (Bold) and maybe even TMO (Javelin), and nothing for Sprint for who knows how long?

Sprint is plagued by fragmented and incompatible technologies: CDMA, iDEN and WiMAX. In this business, scale counts. Scale drives down costs. It strengthens. With three different technologies, there is no scale of any one technology. There is no muscle. Remarkable that Forsee couldn’t figure that out. Think iDEN is a drag? Just wait for WiMax. If Sprint becomes the majority shareholder in Clearwire, Sprint shareholders can probably look forward to consolidated WiMax related losses for years to come. Dan is in a tough position. He’s got a three front war on his hands. Sprint should migrate iDEN subs to CDMA, close iDEN, and take the one time iDEN write down; then sell off WiMax assets and spectrum and pay down debt…get Intel, Google, Comcast, Time Warner or Craig to pay cash for it. Focus and build scale…and profits… on CDMA and EVDO revs.

I see Sprint's assets as strong. It's their marketing and communication that has failed. In terms of the iPhone, I really don't understand why people like it so much. Yes, a sexy phone, but in terms of functionality, my Treo is far more powerful and versatile for what I use it for. And with the myriad of touch screen phones now out there, I see it as the Apple marketing machine as opposed to real quality and benefit.

It's hard to debate the quality of networks b/c of our own strong personal biases and experiences, and third party studies are obscure and have lots of small print. The reality is that each network has its strengths, and phone type and plans are often even bigger drivers of choice. I think carriers who focus on the growth segment, prepaid will see the greatest growth. Also, the prepaid broadband market is heating up!

Cheers,
PrepaidWirelessGuy
www.prepaid-wireless-guide.com/prepaid-wireless-internet.html

Disclaimer - Former Employee. The Nextel staff ran into the Sprint process staff and then everything ground to a halt. Working through Sprint's process I wondered if my job was to deliver a product to the customer or prove to the world that I completed the process. Also, at some time Sprint has lost sight the customer service is number one and now their reputation cannot be repaired. Unfortunately some of my friends will lose their jobs.

"highly profitable prepaid customers"
They're not nearly as profitable as contract customers, as the average ARPU is considerably higher.

With that said, I agree with many above, and think the main issue is their lack of a strong identity. What does Sprint stand for? ... Even I can't really say. I think they have a relatively strong network, particularly 3G, but their handsets need a refresh. To their credit, their customer service initiatives have gotten a lot better.

Well, Sprint has damaged itself, with poor customer service. Long time ago I was with Sprint, but their PCS service was terrible, lots of dropped calls, and poor customer service made me leave as soon as my plan expired.
Apparently they didn't learn their lesson, as other people I know have also left Sprint or are planning to leave it.

Dam, is this all we have to look forward to? There is a continual harangue about what went wrong when Sprint bought out Nextel leaders---yup, the Nextel leaders were bought and paid for. What did they know and when did they know it? Nextelians, get real. You were sold, then taken in as indentured servants, then dismissed when you didn't fit into a failing strategy. Be thankful and get on with your lives.!! IDEN is dead---and customers should have been migrated to CDMA long ago---but no one wanted to hurt their indentured servants feeling---especially since most of them were in top executive spots AFTER the "merge". Look in the mirror---then move on. As for Mr. Hesse---good luck, count your millions in the interim and keep on making those commercials and collecting your SAG fees.

Unlike most of you, I DO understand why Sprint is having such a hard time now. Think back to about a year ago when Sprint decided to "drop" so-called "bad customers." These were not dead-beat customers, but customers who only wanted Sprint to provide the service and coverage they advertised. Before you say it, No - I was not one of those customers. I was, however, a customer who had been w/Sprint aince its inception (SprintPCS days starting back in 195-96). My wife and I left after we were told our unlimited plan would not be renewed, and that we had to purchase a higher rated plan to receive the same level of service. This, coupled with what we heard about Sprint's treatment of other paying customers made us switch.
The economy is bad. Most of these companies who threw customer service out of the window in favor of incresed profits are now reaping their just reward. Sprint had one of the largest subscriber bases until their brilliant plan to get rid of the paying customer. Maybe some of these companies need to review their business plans a put the focus back where it needs to belong...CUSTOMER SERVICE. Cordial, respectful, and honest customer service is going to bring in more of people's dispoable income than their current approach.

Dan's trying to hustle smartphones at a $100 a month service fee, from a 1940s style diner in black and white film. What's that about? Is Humphrey Bogart going to buy one? Has anybody noticed discretionary income is battered and bruised and the economy is lying in the gutter?

You are right Dan offers the store. The number 1 and 2 carrier offer gimmickry to get their customers. For $100 hundred a month you get push-to-talk, email, text message, talk, television, radio, mobile to mobile and GPS for that amount. What do you get with the other two? Answer? Just talk and text. Whoopee do. Plus they have a 69.99 and an 89.99 plan. I guess part of the story is better than the whole story. You decide!!!

I'm currently a Sprint customer and have been trying to get a simple billing issue resolved for months. One of their agents made a mistake with a change causing my bill to go up $50 instead of staying flat. Sprint acknowledged what he did was a mistake. Even so, I'm being told it cannot be fixed -- they will only lower my bill by $20 leaving me $30 higher than I was before the mistake was made. I'm happy with my phones and with my service, but Spring's billing and customer service absolutely suck. I plan to change to AT&T or Verizon as soon as I can.