NEW YORK -(Dow Jones)- A quartet of directors at Sprint Nextel have said they plan to leave, signaling a change at the top of the troubled wireless carrier.
Given the problems that have occurred on the current board's watch, such as the erosion of more than 75% of the company's market value over the past nine months, many believe change - in any form - will benefit the Overland Park, Kan., company. New directors may provide new direction and flexibility for new Chief Executive Dan Hesse.
"The departure of four board members should provide a much needed fresh perspective to the board," said Walter Piecyk, an analyst at Pali Research. "For four to leave in this short period of time is a positive."
Two directors, Linda Koch Lorimer and Keith Bane, said they would not stand for re-election during the shareholder meeting in May, according to a filing with the Securities and Exchange Commission on Monday. They follow two other directors, Frank Drendel and William Swanson, who made similar filings last month.
"I think it's an important change," said John Hodulik, an analyst at UBS. "The board has to shoulder some of the blame for what's gone on in the past couple of years. They need to get some new blood in there."
Still, others were disappointed in the timing.
"It would've been more useful before Hesse was hired," said Patrick Comack, an analyst at Zachary Investment Research. "They picked the current CEO, so it's late in the game for them."
Comack said Hesse can still do a good job, but added that it would have been "healthier" if a new board chose the CEO.
Still, the directors' pending departure and an expected shake-up in the senior management represents a badly needed makeover for Sprint, Hodulik said.
The prior management team and directors oversaw Sprint's acquisition of Nextel, which led to network quality problems, subscriber defections and a muddled marketing message with too many brands. The end result: a $29.7 billion write-down and one of the largest quarterly losses reported late last month, and expectations that the subscriber losses will continue.
Piecyk, meanwhile, has long pushed for shareholders to vote down another director, Irvine Hockaday, citing a lack of relevant experience.
Hockaday was the chief executive of Hallmarks Cards, and serves as a director at Ford Motor, Crown Media Holdings, Estee Lauder and Aquila.
Piecyk isn't alone in his opinion.
"Hockaday has to follow," Comack said. "With this mass exodus of directors, he has to be the first in line to be leaving."
Hockaday couldn't immediately be reached for comment. Sprint declined to comment.
Beyond Sprint's customer service issues and subscriber losses, Hesse faces the task of figuring out the longer term strategy in dealing with the company's WiMax investment and its Nextel iDEN network. These are issues the board will be helping Hesse with, so it's necessary that the directors ask tough questions and bring a new look at the operations.
"I think one director can have an impact on the company if they're willing to be vocal," Piecyk said.
Sprint holds its regular shareholder meeting on May 13. The company has typically carried 12 directors on its board, but could go to as few as eight and as many as 20. It's unclear how many directors it will opt to take on.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
Corrected March 18, 2008 11:24 ET (15:24 GMT)
(END) Dow Jones Newswires
Posted to the site on 18th March 2008
Posted to: www.cellular-news.com/story/29975.php