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How Sprint And Nextel Messed Up The Merger: The Cultural Divide

By Rafat Ali - Fri 23 Nov 2007 07:38 PM PST

That the Sprint (NYSE: S) Nextel merger was messed up big time is no secret now...WaPo documents some of the cultural differences that led to present condition. Nextel’s entrepreneurial culture didn’t gel with Sprint’s button-down culture, and since Dec 2004 when the merger was announced, Sprint Nextel has taken steps to merge the two cultures, creating committees and hiring consultants. But despite those efforts, the tension between the two factions has only risen, the story says.

“At the heart of the tension was a sense of mistrust on both sides, they said. Some Nextel employees say they feel the aggressive, entrepreneurial style that spurred its early growth has been stamped out by Sprint’s more bureaucratic approach. Some of the Sprint folks say they feel deceived by Nextel’s deteriorating network, the source of the company’s deepest customer losses.”

Update: Portfolio’s latest issue also has a one pager on what went wrong with the merger: Pre-merger, Nextel earned an average of $60 a month for every subscriber. As of the second quarter, Sprint Nextel’s figure was $57.28. AT&T’s and Verizon’s earnings per subscriber--at $50.63 and $51.05, respectively--have been rising, not falling.

Posted in: Companies, Operators, SprintNextel

Related Research from Alacrastore.com

3 Responses:
  • From Richard dysinger Mon 26 Nov 2007 05:31 AM

    They really did try to cut Solomon’s Baby in half. Sprint Name, Nextel Colors, Reston as a Corporate HQ KC as an Operational HQ. Gave the illusion that employees could cling to the old allegiances.  Having seen the the seamless integration of AT&T;and Cingular into a single brand this failure stands out in even greater contrast. Forsee handed the CMO job to Nextel and that sealed it. Second, Sprint had a tradition of growing organically. Having narrowly escaped the MCI merger, and having built rather than assembled their platform, the organic culture at Sprint was basically if we didn’t build it, it sucks.  Didn’t help that the Nextel network was not all that it was hyped up to be.  Also on the enterprise sales side Sprint had just completed a rather painful and disruptive re-org that re aligned business units according to the consumer rather than the technology. Having been through 6 quarters of that disorientation Sprint Enterprise was just getting its feet on the ground when it had to integrate Nextel into its Strategic Account Sales Teams. It was not a happy day for a lot of folks who now had to share Fortune 100 accounts with a Nextel Enterprise Sales Team that frankly was not up to Sprint Standards and had no idea how to provide customer support for data and voice.  When Embarq came along most of the good consumer marketing folks in Kansas read the writing on the wall and went with Embarq. Good old fashioned wire line telephony . . . In the end Sprint lost their brand identity, lost a good chunk of their best people and despite having the best wireless network in the U.S. could not get marketing traction as a dual personality brand.

  • From Gary Wed 16 Jan 2008 12:56 PM

    From inside the organization, and in opposition to Richard’s opinions, the article is VERY accurate about the pitfalls of the last few quarters. Nextel’s failures were far less of a disappointment in hype, than an abandonment by Sprint in the interest of beaurocracy and spectrum aquisition.

  • From Rob Thu 14 Feb 2008 09:17 AM

    As a past employee of Sprint (14 years) I have seen the company really screw up its acquisitions. A small sampling to help you understand the problem:

    Telenet was the worlds top data packet company in its day. Sprint purchased them and Telenet was absorbed into the “Sprint Culture” (never to be heard from again). These x.25 gurus became the pre-sales and post-sales arm of Sprint’s data initiative. Unfortunately, it took years to get any data mentality to the company and they had real problems integrating voice and data products. (They really never quite figured it out!)

    Paranet (a professional services company) was purchased for its human ability to integrate services and create new opportunities. After 2 years of no integration, almost all of the “human capital” had left the company and the integration finally started. Everything that was of value as an entity was wasted. Most importantly, the opportunity to enter the Professional Services Market was lost and customers left in large numbers.

    Now we have the Nextel purchase. Poor integration, no direction on the brand, terrible marketing, and lots of technology issues caused disaster.

    Sprint has continually failed to develop a strategy for integration. Sprint waits to see how the acquired company will fit into its structure and they expect lower level individuals to just “do the right things”! Sprint needs to decide how they plan to grow and stick to the plan. If they grow organically, quit purchasing other companies. If they choose to grow through acquisition, they need to develop a strategy for acquiring new companies that includes total integration of the two business entities. (Please stop attempting to not offend anyone – it causes everyone to be offended!)

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