Hesse Takes Charge at Sprint Nextel

Embarq CEO Dan Hesse is pictured at the company's headquarters in Overland Park, Kan. in this May 17, 2007 file photo. Sprint Nextel Corp. on Tuesday, Dec. 18, 2007 named Hesse as its new chief executive officer, effective immediately.(AP Photo/Charlie Riedel, file) (Charlie Riedel - AP)

Sprint Nextel's new chief executive, industry veteran Daniel R. Hesse, may bring serious change to the struggling wireless carrier, saying he will reevaluate its controversial high-speed Internet strategy and consider moving the company's headquarters from Reston.

Hesse, 54, yesterday took the helm of the country's third-largest wireless company, a position that has been vacant since October when Gary D. Forsee quit under pressure from investors and board members. Hesse most recently was chief executive of Embarq, a local phone-service company spun off from Sprint last year. He previously led the wireless division of AT&T, now the nation's largest wireless carrier, and has close ties to Sprint's board of directors.

Although he is respected on Wall Street, some industry analysts are skeptical about his ability to bring about the dramatic changes necessary to turn the company around. Since its merger with Nextel two years ago, Sprint has lost many customers because of problems with its network and customer service. Sprint had also committed to spending at least $5 billion to build a high-speed network using a largely untested technology called WiMax, a gamble that alarmed some investors. Its partnership to build the network with wireless firm Clearwire dissolved last month.

Analysts and employees' speculation yesterday focused on Hesse's plans for WiMax and the possible relocation of the company's corporate headquarters. Hesse lives near Embarq's headquarters in Overland Park, Kan., Sprint's former home. The company's operational base, with about 13,000 employees, remains there. About 4,500 employees and executives work in Reston.

"One of the things I will evaluate is whether we should consolidate to one headquarters or not and where that headquarters ought to be," Hesse said yesterday in an interview. "I've not made any decisions yet."

He also said he does not have a "magic timetable" for figuring out the direction of the WiMax network, which is supposed to be available in Washington and Baltimore next month. "That is something I will spend a good deal of time on right off the bat," he said.

Hesse said his first objective is to stem the steady loss of customers to its larger competitors, in part by improving customer service. Other pressing issues include developing a new image to differentiate Sprint's brand from competitors and easing the culture clash that has plagued the company since it merged with Nextel.

"I have experience in all aspects of Sprint's business. . . . I am very familiar with both cultures, and I think I can make a difference," he said.

Those who questioned Hesse's appointment said his experience could work against him because he might not bring a fresh enough perspective to the job.

Sprint's problems require drastic change, Pali Research analyst Walter Piecyk said in a note to investors.

Although Hesse may intend to improve Sprint's poor operational performance and cultural differences, "we fear that it will be the typical corporate 10-point plan that lacks the radical change and immediate action necessary to set a new course for Sprint," Piecyk said.

He expressed disappointment at the board's selection of Hesse and suggested that board director Irvine O. Hockaday Jr., who led the search committee for the position, chose him because of his ties to Kansas City rather than for his leadership abilities -- a sign that the company will move its headquarters.