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Sprint CEO Marcelo Claure outlines shake-up of entire company

Marcelo Claure, Sprint CEO, is making changes quickly after rejecting advice to leave things alone for 100 days.
Marcelo Claure, Sprint CEO, is making changes quickly after rejecting advice to leave things alone for 100 days. Associated Press

New Sprint CEO Marcelo Claure on Thursday outlined a continuing shake-up of the company that promises to touch every corner of the struggling wireless carrier.

Claure, on the job only since Aug. 11, already has changed Sprint’s pricing, data plans, advertisements and marketing.

Everything else comes next and with a single goal in mind, Claure said in his most extensive remarks to date about his plans for Sprint.

“What we’re going to focus on, and we’re going to be crazy about it, is to get customers back to us,” Claure said at a New York investor event sponsored by investment banking firm Goldman Sachs.

Claure rattled off change after change in the works at the Overland Park-based business. He delivered an insider’s look at the publicly traded company in contrast to the often reserved disclosures of his predecessor Dan Hesse.

Claure told investors that he:

▪ Is rebuilding his top management team.

▪ Has an extensive list of unnecessary spending that will be cut.

▪ Is shifting Sprint’s strategy for boosting its lagging network speeds.

▪ Plans to drop the pursuit of some kinds of business.

▪ Is seeking a closer working relationship with Sprint’s Tokyo-based owner, SoftBank Corp.

▪ Is dropping rules to allow employees to act more like entrepreneurs.

The one topic Claure skipped over was jobs. Outsiders have said his earlier promise to slash costs almost certainly will mean job cuts, and cutbacks may surface soon.

Specifically, spokeswoman Melinda Tiemeyer said Thursday that employees in Sprint’s information technology, portfolio management, network and technology groups have been notified about upcoming organizational changes that “include employee reductions.”

She said the number of jobs to be cut and the specific jobs involved would be determined and those employees notified in October. These cutbacks, Tiemeyer said, stem from a review that began before Claure became Sprint’s CEO.

Sprint’s job count already has been falling this year. Tiemeyer said it has about 33,000 employees now, down from 36,000 the company reported as of the end of March. Tiemeyer said the decline reflects previously announced plans to close less profitable stores and cut back on customer care centers.

At Thursday’s event, Claure used his debut on Wall Street to say he rejected advice to make no changes during his first 100 days as head of the company.

“I just couldn’t help myself,” he said.

His remarks played well on the stock market, where Sprint shares climbed more than 6 percent for the second day in a row. Shares rose 42 cents Thursday to close at $6.57.

“Today’s presentation set an important tone about the new Sprint and gave us confidence that it is being looked at with a set of fresh eyes,” analyst Jennifer Fritzsche said in a note to clients of Wells Fargo Securities.

Sprint has been shedding subscribers steadily, watching many of them sign up with its rivals Verizon, AT&T and T-Mobile.

T-Mobile CEO John Legere had bragged Wednesday that August was its best month ever for signing up customers and that T-Mobile would end this year with more subscribers than Sprint.

Claure acknowledged Sprint’s disadvantage by saying Thursday that even his team of vice presidents was unable to answer the question: “Why would anybody want to buy a Sprint phone?”

The silence, plus talks with dealers and customers, led to the quick change in pricing, plans that offer consumers more data, and new advertisements that dropped “a hamster talking to people,” Claure said.

And, he said, some of the first moves to cut prices have had an impact. Claure said there have been a few days recently in which Sprint gained more customers than it lost.

That has not happened since Tokyo-based SoftBank Corp. acquired control of Sprint last year, he said.

“That’s a big deal,” Claure said.

Claure told his New York audience that his vice presidents know they’re all under review, adding that some “might not be up for the ride.” The vice presidents were told, “‘Some of you will make it. Some of you won’t,’ and they understand,” he said.

In rebuilding his management team, Claure said he would recruit from outside the company and promote from within it.

Spending also is under close scrutiny because Sprint must lower its costs in providing service, Claure said.

“Every single dollar that gets spent out of Sprint gets monitored now,” he said.

Sprint formed an office specifically to manage costs. He has told employees that the company can only spend money on what it needs to have, not on what would be nice to have.

“We have a pretty extensive list that the company has accumulated that are nice-to-haves. Those are the first that are going to go,” he said.

Asked about the list, Claure said he would share it with employees first.

Claure said he also is changing the strategy behind speeding up its last-place network data speeds. Data is what smart phones consume when customers view videos, stream music or post to Facebook.

Sprint is rolling out a faster service called Sprint Spark using its vast holding of untapped wireless spectrum. Crews have been working to deploy Spark using the spectrum across the entire network, eventually with the goal of leapfrogging rivals’ network speeds.

Claure said the blanket deployment plan will give way to using the spectrum first where Sprint’s network is congested, and second in “a few cities” so “we can get some early wins” in the battle for customers.

He said Sprint would be announcing those cities soon.

So far, there is no evidence that Sprint’s network crews are changing their work, said Robert Herron, who founded www.s4gru.com, a website devoted to tracking Sprint’s network upgrade. He said crews logically would complete work where they are now before being shifted to higher priority cell tower sites.

Although Claure didn’t address it, Sprint told Bloomberg News Thursday it won’t take part in a federal auction of wireless spectrum set for later this year. It involves airwaves that don’t match with Sprint’s current network, though the company repeated it is interested in a different spectrum auction set for next year.

Claure said Sprint also is reviewing the kinds of business it pursues, though he wasn’t specific about what might get dropped.

“We try to compete everywhere, at every segment, at every type of business,” he said. “And you can’t because at the end of it you don’t win anything.”

Claure said Sprint’s relationship with its Japanese parent SoftBank and its founder and CEO Masa Son has changed.

Son, who is based in Tokyo, no longer has Monday meetings with Sprint’s top 25 employees, Claure said.

“You can’t run a company out of Tokyo, you just can’t. So we’ve killed that practice,” he said.

Son and Claure still talk when either has an idea to share or seeks the others’ input.

Still, Claure said he wants a closer working relationship with SoftBank, noting that it already has used the kind of wireless spectrum Sprint is using to build its faster Spark service. He is open to having SoftBank engineers to come to Sprint.

Claure also told a short version of how Son convinced him to become Sprint’s CEO. At the time, Claure was running his own business, Brightstar Corp., a $10-billion-a-year phone distribution company that he started by selling used phones from his car.

Claure recalled that Son said to him, “I want you to run Sprint.”

“I can’t. I have my own company. I’m very happy,” was his reply.

“What about if I buy your company?” was Son’s offer, and Claure did not refuse.

SoftBank acquired a controlling stake in Brightstar last year and agreed to buy the rest of Claure’s holdings when it named him CEO.

Claure said he has tried to keep employees updated through three town hall meetings in less than 30 days.

He also has told employees who deal directly with customers to rip up the rule book that, for example, prevented them from calling a customer a year after signing them up. He has told them to act on their own.

“Be an entrepreneur. Go out on the streets. Get customers into the stores,” he said.

And, he said, the shift is starting to make a difference.

“Today, when you walk on (the headquarters) campus you will see there’s a good vibe. People are excited. People are motivated. People want to do more,” he said. “That’s the kind of culture we want to build. It takes time.”

To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com. Follow him on Facebook and Twitter @mdkcstar.

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