Sprint Decides Kansas Is Home
Thursday, February 14, 2008
When Sprint and Nextel announced their merger in 2005, it was touted as a union of equals. Both corporate campuses would be maintained, with top executives based in Reston and most operations in Overland Park, Kan.
That split-campus decision, made to appease employees who didn't want to move from either location, hindered the integration of company cultures and technologies. Meanwhile, the stock declined more than 40 percent in the past year and the company lost about 1 million subscribers to competitors.
Yesterday, chief executive Dan Hesse announced that Sprint Nextel would move its corporate headquarters from Reston to Overland Park in his latest bold shake-up. It comes weeks after the ouster of three top executives and an announcement of 4,000 layoffs -- and just months after AOL's decision to transfer its headquarters to New York.
Some say the move marks an end of an era in the region's telecommunications industry, following the sale of homegrown telecom giant MCI.
"It's a blow for the area to be a telecom hub and center of gravity," said Daniel Akerson, former chief executive of Nextel and a managing director at private-equity group Carlyle.
But, Akerson added, "there's still a lot of resonant entrepreneurs that were spun out of all of those companies that will persist and maybe there will be a new AOL or new Nextel."
Sprint didn't disclose how many of its 4,400 Washington area employees would be affected by the relocation but did say a small number of senior leaders would move to Overland Park. Hesse said Sprint would reduce the number of office buildings it occupies in Reston to seven from nine. It was already offering voluntary retirement packages to Washington employees.
"The two cultures never really came together, and the company never really took advantage of elements of both cultures as one," Hesse said in an interview yesterday. "What I want to do now is bring them both together."
Hesse said consolidating headquarters will help executives focus on improving operations, bringing back customers who have gone to competitors, and focusing on projects like building a new high-speed network. The change will also reduce travel costs, with Hesse and some other executives traveling between the two campuses at least once a week.
Because the company's greatest concentration of employees was in Overland Park, where Sprint got its start more than a century ago as a local wire-line and then long-distance phone operator, Hesse said it made sense to choose the Kansas location over the Washington area.
Hesse took over the company in December after the ouster of Gary Forsee, who in 2005 was the region's fourth-highest-paid executive. Forsee left under pressure from unhappy investors, who saw the merger with Nextel as a disaster and sought dramatic change for the company.
The board's choice of Hesse -- who came from the local phone spinoff of Sprint, called Embarq -- surprised some because he was an insider. Within weeks of his arrival, he replaced Sprint's chief financial officer, chief marketing officer and president of sales and distribution. The company has also said it may write off as much as $31 billion related to the merger.