Cerner and Sprint announcements make for thunderous business news in KC
08/10/2014 10:00 AM
08/10/2014 3:00 PM
Kansas City-based Cerner Corp., the master of big announcements, dropped another last week when it revealed plans to pay $1.3 billion for the health information technology unit of German-based Siemens AG.
The purchase plants Kansas City as the headquarters of a clear leader in the growing health records and medical data industry. Cerner’s worldwide employment is expected to climb to 20,000 from 14,000, with revenues projected at $4.5 billion a year. Given the company’s demonstrated willingness to invest in its hometown, what’s good news for Cerner is good news for the region.
Within hours, though, word of the Cerner deal was eclipsed by more high drama at Overland Park-based Sprint Corp.
Yielding to regulatory realities, the struggling telecommunications company dropped a longstanding effort to acquire rival T-Mobile USA. Chief executive office Dan Hesse was sent packing, and Marcelo Claure, a 43-year-old Bolivian-born wunderkind, was installed at Sprint’s helm.
In the short term, the news was actually positive for Kansas City. A merger with T-Mobile held the prospect of deep job cuts at Sprint and possibly a relocation to a headquarters elsewhere. Claure, founder of Brightstar, a wildly successful Miami-based cellphone distributor, is expected to relocate to Kansas City and attempt a bold turnaround from here.
But the future for Sprint and its 7,500 local employees remains uncertain. The company has lost money every year since its ill-fated 2007 merger with Nextel. The chief executive of its corporate parent, SoftBank Corp. of Japan, has made no secret of his exasperation with Sprint’s stodgy culture. The company has a “loser” mentality, Masayoshi Son has said publicly. His establishment of an executive office in San Carlos, Calif., has created stress within Sprint’s management.
Claure has deep roots in Miami. Besides running Brightstar, one of the largest privately held companies in the United States, he has been working with British soccer star David Beckham and others in an investor group that wants to bring a professional soccer franchise to Miami.
Claure moves fast. Son has called him an “execution-driven leader.” He has not hesitated to fire Brightstar employees deemed not up to his level of expectations. Now with an impatient corporate owner and hard-charging executive, the pressure on Sprint to overcome deep-seated problems will be intense.
Consumers, at least, can find some gratification in last week’s telecommunications news. The U.S. wireless industry is already dominated by AT&T and Verizon, and government regulators had correctly expressed reluctance to create another mega-carrier through a Sprint and T-Mobile merger, fearing it would lead to higher prices and discourage innovation.
Sprint and T-Mobile will continue to go separate ways. Unfortunately for Kansas City, T-Mobile has shown more creativity and aggressiveness of late.
As for Cerner, it shows no signs of slowing down. Work is underway on an “innovation campus” in south Kansas City, which is expected to ultimately employ 15,000 workers. Company executives said the acquisition of Siemens may accelerate the progress there.
Kansas City is fortunate to be the base for Cerner, whose executives recognized early on the potential of making health care records accessible and convenient to providers and patients. Cerner also was quick to jump into the field of using “big data” to revolutionize health care and medicine.
Also, while Claure is still working to bring a pro soccer team to Miami, Kansas City has one of the nation’s best in Sporting KC — owned in part by the top executives of Cerner.
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