The problem with Dan Hesse is one of perception. He is being blamed for every blunder Sprint (NYSE: S) has made since the beginning of time, Clearwire, WiMAX, and merger disasters included. His current business strategy in guiding Sprint out of these missteps represents a well thought out plan to logically position the company to compete with Verizon and AT&T in the future. Yes, he is taking short-term heat from detractors who want to see short-term profits as Wall Street envisions. Thankfully, Hesse is not listening and continues to follow his vision. See (Sprint’s board watching CEO Dan Hesse closely amid investor unrest)
IPhone Investment | LTE Upgrade
Sprint’s well publicized investment of about $20 Billion to purchase 30.5 million iPhone’s over the next four years is significant in saying the 3rd largest carrier is in implicit about staying in the mobile market as a contender with the heavy weights. It is a calculated risk and good business strategy for long-term returns on investment. Hesse knows the purchase will lose money for the near term, but is betting on the upside in Sprints new partnership with Apple, Inc. It is realistic to envision Apple releasing new iPhone versions to the company as part of the deal. See (Report: Sprint Makes Multibillion Bet on the iPhone)
Wall Street Skeptical
Hesse has moved to put its LTE upgrade strategy on the forefront to ensure a seamless transition to the now standard industry technology through 2012 and 2013. Although investment analysts have criticized the move by Sprint over capital funding, it remains the best option for the operator on in a long-term commitment strategy to keep relevant in relation to recent set-backs with cable operators. The Sprint CEO continues to defend his actions amid strong opposition from financial naysayers. See (Sprint CEO defends company’s decision to bet it all on Apple’s iPhone)
“Management must demonstrate an ability to execute against its strategy before investors give the company the benefit of the doubt.” See (Sprint’s stock plunges after LTE strategy conference)
Sprint CFO Jeff Euteneuer indicated the company would spend $10 Billion in 2012 and 2013 on Network Vision and LTE rollout including maintenance of its wire-line and wireless operations. However, at the same time the company will save $10 to $11 Billion on savings in operating expenses and capital expenditures through the period 2011 – 2017, and $4 Billion from eliminating its iDEN service.
Good Vision Long-Term, Not Short-Term
Dan Hesse is steadfast in his commitment to see Sprint through rough times as competitors jockey for position to enhance their portfolios in the fast growing mobile arena. Good CEO’s take criticism with a grain of salt, ignoring detractor comments as they spring into action. Hesse’s strategy will ultimately prove correct and his legacy will endure just as company profits will endure for the long-term. Yes, Sprint is losing money in the near term, but on the other side of this CEO’s vision Sprint will be positioned to return significant profits to investors. Defending Dan Hesse is not a stretch, but a model for others to follow in business strategy.