Sprint's Forsee Ousted After Failing to Catch Rivals (Update1)

Oct. 8 (Bloomberg) -- Sprint Nextel Corp., the third- largest U.S. wireless carrier, ousted Chief Executive Officer Gary Forsee after he failed to wrest customers from Verizon Wireless and AT&T Inc.

Forsee will leave immediately, Sprint said today in a statement. Chief Financial Officer Paul Saleh will run the company on an interim basis until Sprint finds a permanent replacement.

After two years trying to make the $36 billion purchase of Nextel Communications Inc. work, Forsee lost investor support as about 700,000 monthly contract customers fled in the past year. He had a tougher time than analysts predicted stitching Sprint's network together with Nextel's iDEN technology and new advertisements haven't resonated with customers.

``Forsee has not been able to turn around Sprint's iDEN business since the merger over two years ago,'' J.P. Morgan Securities Inc. analyst Jonathan Chaplin wrote in a note to clients Oct. 4.

The company also said today that it lost about 337,000 contract subscribers in the third quarter. Operating income and revenue for 2007 will be ``slightly'' less than forecasted. The company had previously predicted $11 billion to $11.5 billion in operating income and $41 billion to $42 billion in sales.

Sprint shares, down 2.1 percent this year, fell 51 cents to $18.50 at 4 p.m. in New York Stock Exchange composite trading.

A new chief may be better able to fix the business or more willing to sell some of Reston, Virginia-based Sprint's assets, including the new WiMax wireless unit or Nextel's iDEN network, Chaplin said.

Nextel Purchase

Forsee, 57, reorganized the company and fired workers after he joined Sprint in 2003, helping revive sales the following year. He embarked on a strategy to build the wireless business with the Nextel purchase, adding push-to-talk subscribers.

Nextel customers have griped about poor reception and dropped calls, and Sprint still has to combine two billing systems, a process that may confuse subscribers who receive new bills, Forsee said last month.

Forsee presided over a 95 percent drop in profit in the second quarter because the company was still paying costs from the Nextel purchase and firing workers to trim expenses after customer defections. Competitors lured away subscribers with handsets such as Apple Inc.'s iPhone.

Sprint added 16,000 users to long-term subscriptions in the second quarter, its first increase in a year. AT&T, the largest wireless company, signed up more than 900,000 users to contracts, while Verizon Wireless, the second biggest, added 1.5 million.

Ad Campaign

Sprint started a new advertising campaign in June after its previous ads, which used the slogan ``Power Up,'' failed to win over customers. Forsee replaced Sprint's top marketing executive and hired a new agency.

Progress has been too slow, investors and analysts said. Activist investor Ralph Whitworth, whose Relational Investors LLC owns about 1.9 percent of Sprint's shares, said he has ``lost confidence'' in Forsee, the Wall Street Journal reported last week. Sprint should consider selling its long-distance business and fiber-optic network, he told the newspaper.

To contact the reporters on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net ; Amy Thomson in New York at athomson6@bloomberg.net

Oct 08, 2007 (EarningsWhispers Guidance Summaries via Comtex) -- S | charts | news | PowerRating -- Sprint Nextel Corp. (NYSE: S | charts | news | PowerRating) said it now expects revenue to be slightly below its previous guidance range of $11.0 billion to $11.5 billion for the third quarter and $41.0 billion to $42.0 billion for the year. The current consensus estimate is revenue of $10.29 billion for the quarter ending September 30, 2007 and revenue of $40.91 billion for the year ending December 31, 2007.

This earnings guidance summary was provided by EarningsWhispers, a leading provider of earnings expectations - including corporate guidance announcements and analysts' expectations that differ from published estimates. http://www.earningswhispers.com