New Sprint CEO Has a History of Keeping Things Simple
Published on: 17th Dec 2007
Note -- this news article is more than a year old.
NEW YORK (Dow Jones) New Sprint Nextel Chief Executive Dan Hesse likes to keep things simple.
The 54-year-old telecom veteran eschews an entourage or handlers, prefers to keep his presentations short and discourages unnecessary meetings and bureaucratic dialogue. His style is even more evident in some of his strategic choices: He was the first in the wireless industry to champion a flat-rate plan at the old AT&T Wireless and proceeded to simplify the pricing model and customer experience as CEO of Embarq.
"He's all about the one-page summary," said Dan Alcazar, head of communications and brand management for Embarq who worked under Hesse. "He's always looking for clarity of thought."
Now at the head of Embarq's former parent company, Hesse will need to bring that push for simplicity to Sprint. The No. 3 U.S. wireless company certainly needs the help. Since Sprint acquired Nextel in 2005, the company has muddled up how it communicates with its consumers and investors. As a result, Hesse faces a company with flagging growth and a reputation for poor customer service.
Hesse has a history of juggling the roles of company man and outsider, both during his time at AT&T and now with Sprint. While he has set trends in the wireless industry, his track record isn't flawless, having overseen AT&T Wireless as it lost its market-share position and Embarq as it lost nearly 40% of its market capitalization over the past six months.
Speaking to executives at Sprint's Reston, Va., headquarters on Tuesday, Hesse stressed the need for simplicity and that customers will pay for products or services that are easy to use and immediately benefits them, according to spokesman James Fisher.
Reaction to Hesse's appointment was muted on Wall Street. Sprint's shares fell 5 cents to $13.86.
Analysts, however, were generally pleased but remained cautious.
"He's very well-regarded by (Wall) Street," said Michael Gary Nelson, an analyst at Stanford Group who covers both companies. "He's done an excellent job at Embarq during difficult times for the company. It's incrementally positive for Sprint."
A Simple Plan
Hesse's major career achievement was pioneering the flat-rate model for customers when he took over AT&T Wireless in 1997.
The idea was initially met with resistance from those in parent AT&T who didn't savor sacrificing the roaming and long-distance revenue. But Hesse was undeterred and took his case to Mike Armstrong, then-CEO of AT&T.
"Hesse was like a dog that caught a bus by the bumper," said Dick Martin, an author and retired AT&T public-relations executive who worked with Hesse in the early 1990s. "He wouldn't let go."
He surmised that Verizon Wireless would eventually do the same thing and stressed the importance of being first. In 1998, AT&T Wireless launched its Digital One Rate, setting a trend that was emulated by rival wireless players.
"It changed the face of the entire telecom industry," Martin said.
Despite the move, the business went from the largest U.S. wireless carrier to the No. 3 player behind Cingular Wireless and Verizon Wireless as the industry consolidated in the following few years.
When it came time for AT&T Wireless to go public in 2000, Hesse was passed over for John Zeglis.
Hesse's losing out on the top job was more political than a statement of his competence, Martin said. Still, after Zeglis took over, Hesse left AT&T for good after 23 years.
Before his departure, Hesse was among a cadre of young up-and-coming AT&T executives - a group that included former Hewlett-Packard Chief Executive Carly Fiorina, Alcatel-Lucent Chief Executive Patricia Russo, Global Crossing Chief Executive John Legere and former Sprint head Gary Forsee - who were given a variety of difficult assignments.
Hesse was considered a loyal AT&T employee to management, but was an outsider who was often a source of initial resentment for the employees he was assigned to manage. The executive was often asked to take charge of hostile corporate environments, parachuting into a business that AT&T acquired or wanted reorganized. With each assignment, he was able to successfully earn the loyalty of his employees.
"One theme of his career has been his ability to bring people together with a common purpose," Martin said. "He was given tough assignments and generally did very well in them."
In 1991, he took over AT&T's network systems manufacturing business based in Europe. There, he faced disgruntled employees who weren't pleased an American was taking charge.
He won them over with his personable style and eventually transferred back to the U.S. in 1995 after a successful tenure, Martin said. The network systems group formed part of the basis for Lucent Technologies, which is now a part of Alcatel-Lucent.
Hesse faced similar hostility when he took over AT&T Wireless. The company was entirely staffed by McCaw Cellular employees, and departing CEO Hooper was a longtime McCaw cellular executive.
Again, Hesse's personality and management style did much to ease employees. The old AT&T had a spotty history of acquisitions - including the botched acquisition of NCR Corp. - but many regard the wireless business as one of the few that was successfully integrated.
Sprint recruited Hesse in 2004 to take over the landline business and prepare it for a spin-off. Under his tenure, Embarq's stock rose from its initial public offering price of $51 in May 2006 to a peak of $65.50 roughly a year later. Shares, however, have since fallen below its IPO price and recently traded at $47.50.
Under Hesse, Embarq began using a single bill to handle all of its services, simplified the prices for its high-speed Internet product and offered a permanent rate that would remain as long as the customer had the service.
As CEO of Sprint, Hesse again stands as a company man who was recruited by Forsee, but also as an outsider free from the culture clashes that have plagued the company.
Hesse told Sprint executives that he intends to deal with the lagging corporate culture issues but added that he is entering his job with no preconceived notions, according to Fisher, the company spokesman.
Wall Street is cautiously applauding the new CEO. J.P. Morgan analyst Jonathan Chaplin noted that Hesse has had little experience turning around a struggling business.
"In our view, he will have to prove himself to investors, and it will take a couple of months before we see notable changes to this business," Chaplin said in a note.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; firstname.lastname@example.org
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