Sprint Can’t Catch A Break

It was one of those weeks where for every step you take forward, a monkey jumps on your back and eats your brains.  A lot of us are having that week.  But Sprint CEO Dan Hesse, is really the guy that you don’t want to be right now.  Everything seems to be working against him at the moment.

Sprint has been hinting for quite some time that its problem Nextel unit (and iDEN network) is up for grabs.  And Hess has confirmed that he is actively speaking with potential suitors.  Which would be great for Sprint if it weren’t likely that the credit crisis will make financing the deal a problem.  A Nextel deal is important for freeing up capital to spend on other projects.

Just a year ago, Sprint was trading in the $20 range, since then, it’s value has dropped below $4 a share.  That makes it very difficult to value its Nextel assets, and even harder to raise capital for new projects and network investment.

Sprint is in the middle of rolling out its new 4G WiMax network (the oddly named “Xhom”) for which it will need over 5 billion in financing to complete.  Even with partners like Clearwire, Comcast, Intel, and Google waiting in the wings with nearly 3 billion of what Sprint needs, but again the credit market is messing things up for Sprint.  Xhom is an important project for Sprint and the telecom industry, many view mobile broadband as the future of telecommunications, and a set back for Xhom is a setback for the industry. 

Just when it looks like things couldn’t get worse for Sprint, an unexpected pack of rabid Howler Monkeys jump out of nowhere and create some bad press for Hess – Glass, Lewis & Co, an investor advisory firm, has determined that the Sprint Nextel executives are the most highly overpaid in America.  Granted that Sprint has some justification (it had to pay off an old CEO and incentivize a new one last year), but stories of of overpaid executives just doesn’t play well when your stock is sitting at $3.40 (at the writing of this article).  

As hard as it is for me to feel sorry for Sprint, this is the kind of beating that makes you want to root for the underdog.  Perhaps Hess will be able to throw the monkey off his back, complete a sale of Nextel, and focus on the future of their wireless business including their wireless broadband services.  Time, and a crazy stock and credit market will tell. 

Some guys just can’t catch a break.