Reston-based Sprint Nextel Corp. is betting it can pull off a merger of Kansas and Northern Virginia to create a wireless giant that does everything from connecting construction workers at the press of a button to beaming NFL highlights to your mobile phone.
Created on Aug. 12, Sprint Nextel instantly became one of the biggest companies based in the Washington area with about 80,000 employees nationwide, more than $40 billion in revenue and roughly 44 million mobile phone subscribers.
The underlying logic of the merger was to create a more efficient company by melding the pair's mobile phone businesses, which are growing quickly in an increasingly wireless world, while shedding Sprint's local telephone operations.
The challenge is to combine the distinct cultures at Overland Park, Kan.-based Sprint, whose roots as a local phone provider go back more than a century, with the aggressive entrepreneurial streak at Reston-based Nextel Communications, which was created less than 20 years ago.
Heritage aside, both companies have made marks in recent years by pioneering new technologies. Sprint completed the first nationwide fiber-optic network and made early, heavy investments in a digital mobile phone network. Nextel built the beginnings of a national wireless network by buying up radio spectrum used by taxi dispatchers, and won over business customers with its walkie-talkie-like push-to-talk feature.
Sprint Nextel thinks people have an endless appetite for voice, data and content -- including sports and entertainment video -- on their mobile phones and hopes its single-minded wireless focus will let it feed that hunger.
Sprint Nextel will make its corporate headquarters in Reston -- where the large "Nextel" signs on the buildings had yet to be changed late last week -- but will keep its operational base in Kansas.
So far, only about 18 executives are slated to leave Kansas for Reston, with the same number headed the other way -- a sign of Sprint Nextel's effort to reduce the merger's disruption, as well as its belief that with modern communications it does not really matter where employees are based.
For Washington area workers, the vital question is whether they will still be around when the dust settles.
Sprint Nextel officials declined to provide a detailed estimate of how many jobs may be cut, saying they are still working through the numbers and hope to keep layoffs to a minimum.
Gary D. Forsee, the former Sprint chairman and chief executive who is now Sprint Nextel's chief executive, said the aim is to position the new company for expansion. The firm is already the third-largest wireless player, behind Cingular Wireless and Verizon Wireless.
But he said at least a few thousand positions are likely to be eliminated around the country over time through attrition, not filling jobs that are open and, if necessary, layoffs.
"It's hard to see it playing out where it would be less than a few thousand," Forsee said in an interview last week, stressing that the firm has tried to stay lean -- for example, not filling about 2,000 open jobs this year -- to try to limit layoffs.
"We will clearly, at some stage, have operations that will close and positions and jobs will be eliminated, and employees at some juncture may go through that period of being laid off," he said. "Our . . . interest and intent is to minimize that."
The effort to eliminate duplication starts in the executive suite.
At the top of the pyramid, Forsee, 55, will run the company as its CEO while Timothy M. Donahue, Nextel's former president and chief executive, has assumed the title of executive chairman and what he calls a supporting role.
The two spoke in a joint interview in New York last week, shortly after ringing the opening bell on the stock exchange. Donahue, 56, said he was "wonderfully comfortable" in his role and roared with laughter when asked if he had moved out of his office to make way for Forsee.
"No, I'm still in my office," he said.
Forsee, who is moving to Washington from Kansas and is buying a house in Georgetown, has an office beside Donahue's on the top floor of Nextel's modern but modest headquarters building in Reston.
Asked who had the bigger office, the two men laughed and avoided answering before Forsee acknowledged his was smaller.
"I'm the new guy on the block. I'm not going to just come in and grab my partner's office," he said.
Forsee said the local telephone business is expected to be spun off with 20,000 to 25,000 employees. The spinoff itself may hold down on job cuts at Sprint Nextel because the local unit will have to take finance, human resources and other corporate managers that otherwise might have seen their jobs duplicated in the merged parent company.
Jimmy Gurganus, vice president of the Communications Workers of America union that represents about 3,500 workers at Sprint Nextel's local telephone business, said layoffs are all but inevitable on the wireless side but that he does not foresee them in the local phone unit.
"There will be layoffs there because you are going to merge two wireless operations. As far as the wire line, right now I don't anticipate them, but that's going to be contingent on how they're spun off and what their economic conditions are going to be once they're spun off," Gurganus said.
Sprint Nextel has already picked its top 1,500 managers in a sort of musical-chairs exercise. Many people had to interview to keep their jobs, and some wound up with lesser positions or severance packages that averaged one to two years of pay for executives.
Len J. Lauer, a former Sprint executive who will stay in Kansas as the merged company's chief operating officer, acknowledged that there is anxiety in the ranks over the merger.
"Sure there is. It would be foolish to think that there's not," he said.
Because of the company's decision to leave its operational base in Kansas under Lauer, 48, there will not be a lot of new faces around Washington as a result of the merger.
Of the top five "key executives" listed on Sprint Nextel's Web site, two are from Sprint -- Forsee and Lauer -- and three from Nextel: Donahue; Mark E. Angelino, the new president for business solutions; and Robert S. Foosaner, the senior vice president for government affairs.
Foosaner, 62, is an institution in the Washington telecom community. He is widely known as "The Foos" -- a nickname used even at public meetings of the Federal Communications Commission, where he worked for two decades -- and for his habit of wearing a tie but not buttoning his collar.
David Barden, a telecommunications analyst at Banc of America Securities LLC, cited three risks to the merger: the possibility that the wireless business might unexpectedly deteriorate; the challenge of combining operations inherent in any merger; and the particular complexity of merging different wireless technologies.
Barden, whose firm worked for Sprint Nextel in the past year, said it made sense for the two to combine.
"Their options were to compete with each other and with the larger players as a subscale participant, or to join forces," he said. "To be two Davids or one Goliath."