Fallout from last night: Hesse gone, Legere “welcomes” new Sprint CEO, stocks tank and more…

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It’s been interesting watching the internet react to last night’s developments. For those who may have missed it: Sprint gave up on its plan to merge with T-Mobile, and since then, all hell has broken loose.

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1. Stocks Tank

It’d be foolish to assume that company stock value wouldn’t be affected by the major news, and neither T-Mobile nor Sprint came out unscathed. TMUS dropped 8.40% following news that its rumored merger with Sprint wasn’t going to happen.

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TMUS stock – 5 day view

Sprint value tanked further. Its value dropped to its lowest level for the past 12 months, to just over $5.80 per share. Overnight it dropped by over 18%.

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Sprint stock – 5 day view

In short, the Stock Market didn’t take too kindly to the idea that these two carriers will now be going it alone. At least for the foreseeable future. On a more positive note, both companies have improved very slightly in after-hours trading today.

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2. Hesse sacked, BrightStar chief joins Sprint as new CEO

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No sooner had the news broke that the T-Mo deal was off, then we heard its CEO Dan Hesse would be out as CEO, to be replaced by Brightstar founder Marcelo Claure. He begins in his new position on Monday, August 11th. Dan Hesse had served Sprint since 2007.

My immediate thoughts following the news took me back to rumors that John Legere would be taking over a merged company, if it were to happen. If that was true, and was the plan, Hesse was already out. But removing Hesse after the deal was cancelled suggests Sprint had lost confidence in him way before deciding to scrap its merger plans. Clearly getting a new CEO in the short term was never worth it, but since the deal is off, there was no point in delaying the inevitable.

Although consolidation with T-Mo isn’t going to happen, SoftBank’s Chairman Masayoshi Son still believes consolidation in the market is the best way forward in future:

“While we continue to believe industry consolidation will enhance competitiveness and benefit customers,” Son says, “our focus moving forward will be on making Sprint the most successful carrier.”

SoftBank already owns part of the incoming Chief’s company, BrightStar, which has given Claure the experience of working closely with Sprint’s board already.

“I’ve had the unique opportunity to spend the past few months actively engaging with Sprint’s board, management team, and front-line employees,” Claure says in a statement. “I am honored to have the opportunity to now lead the Sprint team as we mobilize to become the wireless carrier of choice in the US.”

SoftBank now plans on acquiring the rest of BrightStar.

Via: The Verge

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3. John Legere “welcomes” the new chief

In his typical style, John Legere has welcomed the new chief on Twitter.

And used the fallout as an opportunity to invited Sprint customers to leave the sinking ship and join Magenta:

There more of those, but three seems like plenty.

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4. Door open for Iliad?

Did Iliad know about Sprint’s decision before the rest of us? Is that why it offered its own $33 per share offer for T-Mobile. (Side note: T-Mobile stock is currently sitting at just $31.06).

WSJ reports that the Paris-based telecoms company plans to “forge ahead” with its bid for T-Mobile, despite reports that Deutsche Telekom had dismissed it. The publication’s source claims that “the offer looks better than it did yesterday” and that it “is still there, and it is good”.

Via: WSJ

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  • http://twitter.com/SParKlngCyaNide SparklingCyanide

    As terrible as Hesse was as a CEO, he really was a genuinely nice guy.
    Yes he made a LOT of bad decisions, but honestly he inherited a lot of
    them as well. Having said that, I’m very glad to see T-Mobile pulling Ahead. :)

    • archerian

      Genuinely nice guys shouldn’t be CEOs of publicly traded companies

      • Vomitous Mass

        ….aaand that’s why we can’t have nice things.

      • Paul

        He helped Sprint come back from its previous CEO. He just doesn’t have the moxy to keep moving forward. Doesn’t mean he could be a successful CEO of a publically traded company. He just doesn’t need to be in the mobile carrier business anymore.

      • Hiro

        Disagree… you just also need the proper business sense, and the correct people around you, and know how to work the particular industry you’re in. Being a genuinely good guy has nothing to do with it. He wasn’t the right leader of that company, bit that doesn’t mean he isn’t the right CEO for another business.

        • archerian

          I don’t know what you disagreed with me with your statement, we are talking about different things – the CEO of a publicly traded company has one and only one real responsibility – maximizing shareholder wealth, everything is a means to that end. This can be achieved through various means, but being “genuinely nice” like Santa Claus doesn’t make for a successful public company CEO, especially when the company is facing cut-throat competition and dwindling sales and market share. The gloves have to come off.

  • archerian

    Marcelo Claire and Softbank will execute a turnaround of Sprint now that Hesse the apologist is gone. T-Mobile better watch out, there is a limited pool of customers and nowadays net adds come from poaching not new smartphone adopters

    • Bryan Pizzuti

      They hope. Remains to be seen, they’ve got to get Network Vision going again, and generate some excitement around the brand. Otherwise, frankly, Legere is right and they’re going to be #4 by the end of the year.

    • redman12

      T-Mobile should be scared or something? wait till the iPhone 6 comes out. They are gonna snatch even more customers left and right. Watch Sprint tank even more.

      • DirkDigg1er

        If Sprint utilizes Brightstar’s used phone strategy, then yes other carriers will be in trouble.

        • redman12

          Sprint has been blowing smokes for the past couple of years. Even if they use whatever strategy they need. Its gonna take a lot of time to catch up. T-Mobile will be Third carrier by then. Most likely next quarter.

        • DirkDigg1er

          It won’t take as long to bounce back as you think. Sprint still has 54m customers with bad branding. The moment they address those issues people will give them another chance. Look at what T-Mobile did in 2 years.

          T-Mobile will be #3 at some point soon but that doesn’t mean its game over.

        • TechHog

          If you assume that T-Mobile can’t 1-up whatever Sprint tries to do, then sure. However, that’s a big if.

        • archerian

          all the 1-up tactics have positive consumer appeal, but the dark contract practices used by ATT and VzW were highly appealing and cash cows for them. Not sure how long T-mobile can keep up the momentum and start churning out the profits. To be fair, Legere is not looking for the same operating margins as ATT or VzW, but they operate in the same market and are all publicly traded companies.

        • redman12

          Yea, you said. It took 2 years, when you have John Legere as CEO of T-Mobile.. That’s a lot of competing.

        • donnybee

          All I know is that with Sprint making moves soon to reverse its downward spiral, and T-Mobile looking to be more appealing than the big 2, we will have a lot more competition soon! Sprint needs to fix their network. More than anything, that’s what blows. It’s sad too because they have the tremendous backhaul and the wide spectrum holdings. They could be so much better and I think that will be in the near future. That will inevitably put more pressure on T-Mobile.

          Competition is so good!

      • Willie D

        Likely because Sprint will be further into debt to Apple for buying but not selling as many iPhones as they ordered, what with their $5 billion order of iPhone 4S from years ago…

        • chardog

          They admittedly had to go in the hole financially to get the iPhone.. TMO didn’t want to play Apple’s game and waited until the financials were more favorable and were going to restructure the handset purchase process anyway..
          Apple’s market share gains were starting to slow anyway, so they had to start making concessions to gain access to further markets.

  • mingkee

    Who is worse ex-CEO of Sprint?
    Gary Forsee?
    Dan Hesse?

    • Adrayven

      If this was worse ex-CEO’s period, I’d say Léo Apotheker, he didn’t even stay CEO of HP for a year.. They booted his but reaaaal quick.. Started chopping up the company, killed WebOS .. basically threw it away.. HP had a real chance at being a competitor to Google/Apple, but he let it sit for his entire tenure; or rather, just released what Palm had in the pipeline instead of making it their own… It had notification center, multi-tasking cards, etc, well before Apple/Google. Google was quick to copy most of WebOS and Apple followed suit eventually.

      All he did was focus on turning HP into another IBM or Oracle.. Yeah.. fail! By time Meg Whitman got in.. she really had no choice but to kill it ..

      They are still recovering from him.. and he was only in there 11 months and 23 days.

      • Cam Bunton

        Hehe. Gil Amelio.. CEO at Apple for just over 15 months. Had no idea what to do with the company, but bought NeXT, and brought Steve Jobs back. So I guess, not all that bad.

      • Willie D

        I dont know, Carly Fiorina was bad too. And that Mark Hurd guy… HP really knows how to have controversial CEO’s and while I do not agree with the political views of HP’s female CEO’s they all have been household names in California come election time, and thats more than I can say for many other companies.

        • archerian

          Mark Hurd was a successful CEO, maybe not quite so dandy in his personal life. He brought HP back into operating efficiency after Carly jettisoned Agilent and added Compaq. The HP-Compaq synergy is a textbook strategy Hurd successfully executed. It was also during his tenure that HP started growing heavily in the PC business. Overall, not a bad CEO tenure at all.

    • Jeremiah McCurry

      Forsee was much worse. Hesse is the biggest reason Sprint didn’t go under back then.

      • Willie D

        No, they just almost went under again this time around… Hesse blew TWO mergers, MetroPCS at the last minute, and T-Mobile (now owner of MetroPCS) at the last minute again… Both just before announcements. At least Forsee went through with the Nextel bid, even though it was a terrible idea. That makes Dan by far worse.

        • donnybee

          So moving forward with a bad idea makes you better? That’s a weird concept.

          Honestly, I think the Nextel acquisition is the worst thing that ever happened to Sprint. They overpaid BIG TIME, they had a super rough time transitioning the network tech, and they agreed to use some terrible spectrum to launch 4G on by a certain time. That caused them to have the garbage Wi-Max instead of investing in LTE a little bit down the road if they had been able to wait. Nextel was a bad idea.

          “At least Forsee went through with the Nextel bid, even though it was a terrible idea.”
          I can’t understand how the act of actually finishing something terrible is so good in your eyes.

        • Willie D

          Because he followed through, and it lead to major spectrum holdings in the end that Sprint wouldn’t have nor have gained or invested in otherwise. The idea was bad, but in the end Sprint is spectrum rich because of it. Without them having mandates placed for 2.5Ghz that they got from Nextel, do you think they would have bought any part of Clearwire spectrum otherwise? Do you think they would be able to deploy LTE on their PCS band only? They did that now and its a joke, at least with Nextel it forced them into buying other spectrum to build for a later time rather than rely on PCS which they still did until Spark. So yeah, better idea than letting two useful mergers slip through at the last minutes.

        • Jeremiah McCurry

          Hesse didn’t blow the Metro merger. The Sprint board wouldn’t allow him to make the purchase. The Sprint board blew it, big time.

  • William Burr Winans

    The only thing I can say is good for Sprint for realizing how bad Dan Hesse was competing against John Legere lol!

  • Richard Yarrell

    Nothing beats Tmobile or Mr John Legere period they are the carrier kicking major ass since 2012.

  • Guest

    “… we continue to believe industry consolidation will enhance
    competitiveness and benefit customers,” Son says.

    No duh.

    • Willie D

      The only way consolidation would benefit consumers and competitiveness is if US Cellular is bought out by T-Mobile, using their AWS and 700Mhz A-Block to fill in the gaps that T-Mobile lacks or is under limited spectrum control. In this sense, it would make TMobile stronger, a much more viable competitor in the rural and Midwestern market to Verizon the dominant carrier it became after the purchase of Alltel. Other than that, there is nothing that would benefit T-Mobile or Sprint as a combined match, other than PCS spectrum sharing in network infrastructure, but to be honest, T-Mobile PCS LTE is already beating the crap out of Sprint PCS LTE, so I see no point in dragging down T-Mobile just to save a few dollars on shared network costs.

      • Baxter DeBerry

        wont be surprised if T-Mobile does go after Cellular

  • KingCobra

    Dish will likely make an offer now that the door is open. Following the fallout Ergen has stated that he still intends to get into the wireless market and does not plan for Dish to build out a network on its own. Said if Dish ends up having to sell its spectrum or fail to break into the market then he would consider it a personal failure.

    • Willie D

      Dish spectrum is not as complementary with T-Mobile as it is with Sprint, which is why they wanted Sprint and Clearwire so badly. The issue remains with Dish, parent company Echostar does not have enough capital to operate and maintain Sprint once the purchase goes through. Softbank, however, certainly does, but is playing prudently stingy with their pocket book, thinking answers are going to just happen. Like most Japanese businesses and businessmen, Mr. Son has no clue as to what the American market holds, its issues or how to go about fixing problems. Japan by the way is a lot smaller than America, fixing Softbank from Voda was simple and easy, and only needed upgrades the size of California, Oregon and some of Washington, Sprint on the other hand is looking at upgrading a network the size of China! Good luck on that Dish and Sprint

      • Kidney_Thief

        Huh? Dish’s spectrum is extremely complimentary to T-Mobile. Much more so than Sprint’s to T-Mobile.

        • http://pharaohtechblog.blogspot.com/ Conan Kudo (ニール・ゴンパ)

          Dish’s PCS H block spectrum is directly adjacent to Sprint’s PCS G block spectrum used for its LTE network. Dish holds it nationally through its subsidiary “American H Block Wireless, L.L.C.”.

          Dish’s AWS-4 spectrum is adjacent to both PCS H downlink and AWS J block downlink. Breaking the band apart and using it for supplemental downlink would make a ton of sense.

          Dish’s spectrum is more complementary to Sprint (additional 5MHz FDD + 20MHz of supplemental PCS downlink) than T-Mobile (20MHz of supplemental AWS downlink).

  • Winski

    AND, Hasse got a FORTY MILLION DOLLAR severance package… $ 40 MILLION !!!!!

    The most boring CEO ever !!! Worth $ 40 million ??? I don’t think so…

    • dtam

      that’s the problem with golden parachutes. I just wish someone was enough of a sucker to hire me as a CEO. sure I’d try my best but if they decided to go a different direction, I’d be set for life anyways

      • Winski

        Good gig if you can lie your way into that club. Do a 5 year deal; get fired in 2; lawyers have pre-negotiated 3 rd and 4 th year severance..

  • Mschmal

    The fact that the stocks tanked IMHO doesn’t reflect Street sentiment as much as it shows how much the Street is awash in speculation and cheap money. Wall Street is not sexy. It does not create wealth. They are not heros. Wall Street is just a big casino full of bottom feeding leeches and we as a country need to remember that and we need to reverse the financialization of our economy.

    • Jimmie L

      Um how would a system work without easily transferable stock? Communism? We all know how well that has worked out.

  • chardog

    Just $31 for TMUS stock… Look at Sprints.. Tanking? Yes, we’re down a bit, but still over $30. We opened at $15 or $16 last year when it went public.. We’ll do just fine standing on our own. At least if another entity takes over (foreign or non-cellular industry) it will be an acquisition not merger and the company is more like to stay intact (just as we like things).

    • Paul

      Crazy thing about the stock market is that when strong companies drop they usually come back up.

    • Jimmie L

      Uh, stock price on its own is a worthless figure. Market cap (price x shares outstanding) is a good way to compare.

  • Charmed79

    If any other company buys T-mobile, our 5 lines, soon to be 6 would rather go to tracfone, we T-mobile people also like things just the way they are ty!

    • Baxter DeBerry

      lliad is actually not bad..

    • josephsinger

      If you do anything and count on it “staying the same as it was” you have been living in a bubble.

      • Charmed79

        Wow thank you so much, I don’t know what I would have done with my life if you had not gave me those words of wisdom! So let me help you out because you do not seem to understand my statement, I like the direction t-mobile is going and would like it to stay, if another company buys them, then we will just leave. I do believe that is our prerogative the last time I checked, unless someone else is paying our phone bill each month!

        • josephsinger

          You really should not stop taking your meds. The doctor prescribed them for you for a reason.

  • HothTron

    Wait…what?

  • suprafly

    I am happy that T-mobile is going solo.