Sprint Nextel has announced last quarter’s results for the year 2007 and they are worse than expectation of the market and it has also announced that 2008 is not going to be a better year either. CEO, Daniel Hesse, has also announced that company will close around 7% of the retail shops that will cut the number of jobs in almost same proportion. It is not very clear if they are going to cut jobs at the management level too.
Sprint is facing internal problem and external competition from Verizon communications and AT&T. On internal front problems are of the not-so-successful merger with Nextel that it bought in 2005. It was known that there will be issues with the merger but it is taking longer to integrate these two companies. Virtually both the companies are still running as independent from each other, mainly because they use different technology to run the mobile services. So the expected synergy from the merger is not achieved and integration is still taking the time and energy of the management. Now it seems that the merger was a negative NPV project and sprint many need to take some decision about this issue if does not solve anymore.
On the external front both the bigger competitors are using very successful campaigns to have new customers. Verizon is gaining new customers with the promise of better services. It runs ads like "Can you hear me now?" that is strengthening its brand image as a good network around the America. AT&T is gaining new customers by promising new stylist mobile phones to its customers. First it launch Motorola Razor and then it partnered with Apple to launch iPhone in US.
Since the management is fighting with internal problems and they are not able to take any marketing step to give them new customers. Sprint needs to concentrate on gaining new customers using big marketing budget. For the time being, company has decided to Shed 125 Shops, 4,000 Jobs. It will give cost savings in short term but this is not a solution for the deep problems company is facing. Less retail stores mean less contact with the customers and that will hurt the company in long way.
Sprint is facing internal problem and external competition from Verizon communications and AT&T. On internal front problems are of the not-so-successful merger with Nextel that it bought in 2005. It was known that there will be issues with the merger but it is taking longer to integrate these two companies. Virtually both the companies are still running as independent from each other, mainly because they use different technology to run the mobile services. So the expected synergy from the merger is not achieved and integration is still taking the time and energy of the management. Now it seems that the merger was a negative NPV project and sprint many need to take some decision about this issue if does not solve anymore.
On the external front both the bigger competitors are using very successful campaigns to have new customers. Verizon is gaining new customers with the promise of better services. It runs ads like "Can you hear me now?" that is strengthening its brand image as a good network around the America. AT&T is gaining new customers by promising new stylist mobile phones to its customers. First it launch Motorola Razor and then it partnered with Apple to launch iPhone in US.
Since the management is fighting with internal problems and they are not able to take any marketing step to give them new customers. Sprint needs to concentrate on gaining new customers using big marketing budget. For the time being, company has decided to Shed 125 Shops, 4,000 Jobs. It will give cost savings in short term but this is not a solution for the deep problems company is facing. Less retail stores mean less contact with the customers and that will hurt the company in long way.
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