My chief complaint about Sprint (S) has been the customer service, an issue addressed head on by new CEO Dan Hesse in his initial conference call. My experience over three contacts has been that the issue has made a dramatic improvement.
Now, after releasing abysmal Q4 results, Hesse said “The fourth quarter financial results reflect the challenges facing our Wireless business. We are making significant changes across the organization in an effort to improve execution, stabilize our customer base and deliver on the opportunity provided by our assets. Given current deteriorating business conditions, which are more difficult than what I had expected to encounter, these changes will take time to produce improved operating performance, and our near-term subscriber and financial results will continue to be pressured. Additionally, in light of current capital market conditions, we are taking steps to increase our financial flexibility and mitigate refinancing risk by borrowing funds from a revolving credit facility and discontinuing declaring a dividend for the foreseeable future.”
I think it would be hard for anyone to say that Sprint is not in a world of hurt right now. With rival AT&T (T) and Verizon (VZ) adding subscribers regularly, Sprints loss appears to be their gain.
Sprint has ranked at the bottom of the major wireless carriers in customer service for what seems an eternity now and the loss of subscribers directly correlates to those ratings. Fixing the customer service issue is the #1 priority. Based on my initial first person experience(s), the improvement has been dramatic and positive.
One issue, fixes like this will take a long tie to show up in the financials. While it has to be done in order for the company to survive, a ruined reputation like Sprint currently has takes far longer to fix than it did to ruin in the first place.
What is is Berkshire’s (BRK.A) Buffett said, “It takes a lifetime to build a reputation and ten minutes to ruin it”. Thus Sprint’s primary issue.
The good news for shareholders is that Sprint, so far, has made big improvements here. The bad news is that it will take time. Hesse has wisely not started dumping assets for short term results and long term, that decision will pay off if for no other reason that if he sells them a year or two from now, he will be selling them into a much better environment and get a much better price for them.
This will take a while, but so far, Sprint is doing the right things. I still think Google (GOOG) may end up buying them.
Disclosure (“none” means no position):Subscriber, None in Stock
