Activist shareholder Ralph Whitworth, who helped orchestratethe ousters of CEO Robert Nardelli from Home Depot and CEO Jay Sidhu fromSovereign Bancorp, now has his sights trained on Sprint Nextel Corp. CEO GaryForsee.
Since lastyear, Whitworth’s investment fund, Relational Investors, LLC, has bought some53.1 million shares, or 1.9 percent, of Sprint’s outstanding shares, and hasraised thorny questions for Forsee and Sprint’s board of directors.
In aninterview in today’s Wall Street Journal,Whitworth said, “We have lost confidence in Gary Forsee,” and threateneda proxy fight for an undisclosed number of board seats unless Sprint directors“immediately” deal with the company’s leadership. Whitworth has questioned Sprint’sinvestment in a wireless-broadband technology called Wi-Max and asserts thatthe company has lost focus on its core cellphone business.
“Sure, the company isstill profitable and holds a defensible position in its industry with goodproducts, but the question is, how are they spending the profits they make fromthat? Those are the ones we end up focusing on,” Ralph Whitworth, Relational Investors
In aninterview with Directorship[“Whitworth: The Alchemist in the Boardroom,” June/July 2007], the activist saidhe is highly focused on a specific type of investment, typically companies inmature industries that are, or have been, profitable and are underperformingrelative to their peers and their potential.
“Generallythe first indication is a history in the financial data of spending money in away that doesn’t get adequate returns for the investor,” Whitworth told Directorship. “Sure, the company isstill profitable and holds a defensible position in its industry with goodproducts, but the question is, how are they spending the profits they make fromthat? Those are the ones we end up focusing on.”
Sprintshares have fallen 27 percent since its 2005 acquisition of Nextel.