Gary Forsee has resigned as Chairman and CEO of Sprint Nextel, putting into question the operator's $5-billion WiMAX plans. Sprint Nextel has been struggling quarter to quarter from churn in its core mobile-phone business, its poor integration of Nextel and its heavy spending on WiMAX. In particular, activist investor Ralph Whitworth has rattled the cage with management regarding its investments in WiMAX as well as what he calls poor attention to the company's core mobile-phone business.
In addition, credit-rating service Fitch Ratings says it's concerned about Sprint's lagging effort to switch subscribers from Nextel's iDEN network to its CDMA network and the cost of deploying WiMax.
Sprint tried earlier this year to alleviate concerns about its expensive WiMAX strategy by creating a partnership with Clearwire to jointly construct their WiMAX networks and eventually sell services under one brand. Rather than shuttering the business altogether, we could see Sprint looking to spin the business off or look for more financing. Certainly, Intel and Motorola have a lot banking on the success of WiMAX, and Sprint is single-handedly controlling the WiMAX ecosystem and forcing other service providers to look at WiMAX. Sprint also has to roll out something in the 2.5 GHz band to meet FCC rules.
For more on Sprint's WiMAX pressure:
- CNET covers Wall Street's WiMAX worries
- InformationWeek discusses Fitch Ratings' worries
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