Sprint Nextel Corp. (S) announced the joining of Joseph J. Euteneuer as its Chief Financial Officer (CFO). Euteneuer replaces Bob Brust who is retiring from Sprint.
Before joining Sprint, Euteneuer was the financial chief at Qwest Communication, which was acquired by CenturyLink Inc. (CTL) a few days back. Prior to Qwest, Euteneuer also held the post of CFO at XM Satellite Radio Holdings Inc., which merged with Sirius Satellite Radio Inc. Various managerial posts at Comcast Corporation (CMCSA) and its subsidiary, Broadnet Europe are also prominent in Euteneuer’s career.
Sprint had hired Euteneuer in late 2010 but agreed to his joining only after Qwest merged with CenturyLink. We believe Sprint is pinning its hopes on the experience and expertise of its new CFO to return to profitability by gaining market share from the two dominant players, AT&T Inc. (T) and Verizon Communications Inc. (VZ).
Sprint’s share is eroding fast in the U.S. wireless market due to its inability to provide competitive services. It is currently a loss -making entity and has been struggling to retain customers since its 2005 merger with Nextel.
In the fourth quarter of 2010, Sprint started to turn its post-paid wireless business after several years of cost containment and business stabilization. But we belive that there might be a pause in this turnaround as Sprint faces more challenges from the merger of T-Mobile USA, a unit of Deutsche Telekom, with AT&T. Post-merger, AT&T would be almost three times the size of Sprint.
However, we believe an attractive wireless product/service mix, wider 4G network footprint, prepaid brands like Assurance Wireless and Virgin Mobile, Boost Mobile’s Monthly Unlimited plans as well as the Network Vision initiative will continue to add opportunities in the company’s wireless businesses.
We are currently maintaining our long-term Neutral recommendation on Sprint with the Zacks # 3 (Hold) Rank.
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