Sprint Nextel CEO Resigns; Firm Cuts 2007 Guidance
Facing rising pressure from investors, wireless carrier Sprint Nextel said its chairman and chief executive will leave the company immediately and that 2007 earnings and revenue are likely to be below previous forecasts.
Sprint said it is conducting an outside search for a new chief executive to replace departing CEO Gary Forsee.
"It is the right time to put in place new leadership to move the company forward in improving its performance and realizing corporate objectives," board member Irvine Hockaday said in a company statement.
Chief financial officer Paul Saleh will serve as acting CEO until a permanent replacement is found, the company said, and director James Hance, Jr. will take on the role of non-executive chairman.
Also Monday, Sprint Nextel said it expects to report a net loss of approximately 337,000 monthly subscribers in the third quarter. Its operating income excluding some items is expected to fall below the previously forecast range $11 billion to $11.5 billion. Revenue is expected to fall below the earlier forecast of $41 billion to $42 billion.
Sprint Nextel shares closed Monday at $18.50, down 51 cents or 2.7 percent. In extended trading, after the announcement of Forsee's departure, the shares gained 11 cents.
The resignation confirms newspaper articles, citing anonymous sources, that said Forsee's departure was imminent. USA Today reported in Monday's edition that Sprint's board, spurred by disappointing second-quarter earnings, had decided to speed up efforts to replace Forsee after its work to find a replacement was made public last week by The Wall Street Journal.
Forsee took over the nation's third-largest wireless provider in 2003. Since Sprint bought Nextel Communications in August 2005, the company has struggled with several problems and its stock price has dropped 27 percent.
The Journal said company directors began looking for Forsee's replacement in August, around the time Sprint Nextel announced smaller second-quarter profits and that it would continue to struggle in the second half of the year.
Amid technical problems and a sometimes unfocused marketing strategy, Sprint Nextel has steadily lost ground to competitors AT&T and Verizon Wireless in attracting and retaining customers. The company's stock is down 19 percent from where it was before the purchase.
Most recently, Forsee has hung the company's future on the development of WiMax, a fourth-generation mobile network the company claims will provide wireless download speeds comparable to DSL or cable modems.
Sprint Nextel is based in based in Reston, Va., with operational headquarters in Overland Park, Kan.
The Associated Press contributed to this report.