Sympathy for Sprint CEO Hesse Misplaced After Company Performance

By Doug Mohney August 07, 2014

Sprint CEO Dan Hesse was replaced Wednesday, August 6. One narrative is crediting him for "saving" the Sprint-Nextel deal merger, but if that's an accomplishment worth bragging about, I'd hate to see what people call failure. Hesse may be a "nice guy" and well loved in certain media circles, but his record speaks for itself and about why he needed to be replaced sooner.

When Hesse became CEO in December 2007, Sprint was losing customers and money. Before he lost his job, Hesse was the highest paid CEO in the industry with an estimated compensation package of up to $49 million, as compared to only $10.8 million in 2012. In 2013, he pulled in $49.1 million in cash and stock, making more than executives at AT&T, Verizon, and T-Mobile. Rabble rouser T-Mobile CEO John Legere made $29.9 million, while his counterparts at AT&T and Verizon made $23.2 million and $15.8 million respectively.

If you flip back through the years of Hesse's tenure, there are a number of years of customer and revenue losses, a failure of WiMAX and messy ownership of Clearwire, delays in network upgrades and a an extremely questionable investment in upgrading its legacy 3G network when the other big U.S. wireless carriers moved forward into LTE and Voice over LTE. 

SoftBank dropped a bundle to buy Sprint and tried to engineer a merger with T-Mobile US, but regulators aren't in the mood for consolidation.  If Sprint and T-Mobile had merged, all reports put Legere -- not nice guy Hesse -- at the top leadership position of the new entity.  

Clearly, Hesse had reached his expiration date.

Perhaps the biggest surprise was the ascension of Brightstar co-founder and CEO Marcelo Claure as Hesse's replacement. Claure founded Brightstar in 1997 to do the behind-the-scenes dirty work of loading specific software loads onto carrier handsets. Today, Brightstar is worth over $10 billion.

Sprint is going to need a logistics-minded leader to get its LTE network deployed and in shape to compete with AT&T, T-Mobile, and Verizon.  Claure can handle that, but he's also going to need to put his foot down against other flashy, non-standard, gee-whiz technology deployments -- No more WiMAX, or 3G HD voice projects.

Claure, and presumably some other new executives to be named in the next 30 days, will also have to come up with competitive pricing plans to keep existing customers and attract new business.  T-Mobile has confidence and market momentum, qualities lacking in Sprint. Company morale will play a significant role in the next 90 days. Claure will have to act to convince the rank and file that they need to execute and move on from the uncertainty of the merger rumors and years of ups and downs.

Edited by Rory J. Thompson

Contributing Editor

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