Whitworth Targets Sprint Nextel CEO Forsee

Activist shareholder Ralph Whitworth, who helped orchestrate the ousters of CEO Robert Nardelli from Home Depot and CEO Jay Sidhu from Sovereign Bancorp, now has his sights trained on Sprint Nextel Corp. CEO Gary Forsee.

Since last year, Whitworth’s investment fund, Relational Investors, LLC, has bought some 53.1 million shares, or 1.9 percent, of Sprint’s outstanding shares, and has raised thorny questions for Forsee and Sprint’s board of directors.

In an interview in today’s Wall Street Journal, Whitworth said, “We have lost confidence in Gary Forsee,” and threatened a proxy fight for an undisclosed number of board seats unless Sprint directors “immediately” deal with the company’s leadership. Whitworth has questioned Sprint’s investment in a wireless-broadband technology called Wi-Max and asserts that the company has lost focus on its core cellphone business.

"Sure, the company is still profitable and holds a defensible position in its industry with good products, but the question is, how are they spending the profits they make from that? Those are the ones we end up focusing on," Ralph Whitworth, Relational Investors

In an interview with Directorship [“Whitworth: The Alchemist in the Boardroom,” June/July 2007], the activist said he is highly focused on a specific type of investment, typically companies in mature industries that are, or have been, profitable and are underperforming relative to their peers and their potential.

 “Generally the first indication is a history in the financial data of spending money in a way that doesn’t get adequate returns for the investor,” Whitworth told Directorship. “Sure, the company is still profitable and holds a defensible position in its industry with good products, but the question is, how are they spending the profits they make from that? Those are the ones we end up focusing on.”

Sprint shares have fallen 27 percent since its 2005 acquisition of Nextel.