Thursday, December 20, 2007

Sprint's New CEO: So Far So Good

Yeah, I know it has only been one day, but at least Sprint's (S) new CEO knows what the company's #1 problem is.

New CEO Dan Hesse said his first priority will be to tackle the customer-service problems and customer defections that have plagued the company in the past year saying, "I read the magazines and Consumer Reports like everyone else." Good

An internal Sprint document recently disclosed described the company's "inferior results" in customer service. It pointed out that Sprint resolved just 53% of problems on the first call, compared with 71% for Deutsche Telekom AG's T-Mobile USA despite Sprint having nearly 3X's as many customer service reps.

Hesse was the pioneer of AT&T's (T) "Digital One Rate" plan, which introduced flat-rate pricing to U.S. wireless consumers in the late 1990s. Prior the "One Rate" plan, most Americans were accustomed to paying for wireless service by the minute, incurring extra charges for roaming or long-distance calling. In short, they revolutionized the cell phone industry. Hess has the experience and a proven track record, if he complete step two below, he has a chance at success.

The second thing he can do is chop heads. Sprint and Nextel have never merged on a corporate level and until they do, real success will be elusive. I have no idea whose fault it is and two full years after the merger was completed it really no longer matters. Anyone from either side who stands in the way, see ya'.

Fortunately for potential shareholders, both of these steps will take time to accomplish. The evidence that they are being implemented will become apparent before their results show up in earnings and that gives those who wish to buy shares plenty of time to wait.

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