Ever heard of Déjà Vu?
It’s a 2006 movie starring Denzel Washington. It’s also a term taken from French literally meaning “already seen.” The phenomenon of having the strong sensation that an event or experience currently being experienced has been experienced in the past.
The there’s the expression – as Yogi Berra put it – “Déjà Vu All Over Again.” And that’s what I’m afraid Sprint is about to experience with the proposed DISH merger.
In the interest of full disclosure, I was a Director at Sprint for years and a consultant to them after I left, so I’ve seen things from both sides of the campus fence and I have a great deal of loyalty to them. After all, they hold the keys to my retirement!
I went on to build a thriving consulting practice all because of what I learned at Sprint and the contacts I made while there. And I still have friends still there and have owned a Sprint cell phone from the first day they were available in Kansas City.
The week I was laid off, the Star‘s Merriam Pepper wrote an incredible article about me in the business section entitled, “Better Off Laid Off.”
That led me to sitting at my desk for four days nonstop, talking to sobbing men and women who’d also just been laid off, and counseling them and helping them decide what to do going forward. The article also led me to having coffee with Paul Henson at the Pan Pan, on several occasions, so there’s no axe to grind here.
This is just my common sense analysis.
While I don’t expect to see a DISH approval, I predict a failed outcome if this “phenomenon” takes place. Again.
Why? Because Sprint has gone down this path before, back in December, 2004 with Nextel.
That’s when Sprint CEO Gary Forsee stated that, “The combination of Sprint and Nextel builds strength on strength”
Really?
I don’t think anyone bought into that at the time, but the merger was approved a few days later and just outside Washington D.C., Nextel exec Tim Donahue walked on stage in his Dockers and sport shirt to rally support for the just announced merger.
Donahue finished his talk by shouting to the audience, “Now…LET’S ALL GO STICK IT TO VERIZON!!!!!”
The crowd went wild.
Then Forsee strolled on stage in his Brooks Brothers suit and delivered a Power Point presentation of his vision of what the two companies would become.
A hush fell over the crowd, a hush that remained until the actual merger proved that everything was going south as fast as this DISH deal would if approved.
In the initial analysis of the Nextel merger; Sprint added 136,000 customers with Nextel, but lost 364,000 customers overall.
And in its final analysis of the Nextel merger; Ivestopedia ranked Sprint/Nextel as one of the biggest merger failures of all time. Right up there alongside such epic fails as the New York Central/Penn Railroad, Quaker Oats/Snapple and America Online/Time Warner.
What fine company!
Forsee was the only winner, as his severance package added up to over $40 million, including a $1.5 million salary through 2009, $5 million in bonuses, stock options worth $23 million and an $84,000-a-month pension. For life.
Sprint, on the other hand, wrote down $29.7 billion of the $36 billion it paid for Nextel in 2005, 80% of the value of Nextel at the time of acquisition.
Why? My one word answer; CULTURE.
Sprint has a culture and over the years, in my opinion, the culture became the customer. Most of the Sprint Nextel merger failed over cultural clashes between the two entities. Clashes that often meant employees didn’t execute post-integration plans.
Everyone knew there was going to be redundant functions within the two companies. Redundant functions result in layoffs. Layoffs result in fear. Fear generates scared employees. When employees are scared they act to protect themselves first as opposed to helping the two companies “realize synergies”.
“Screw your synergy, I have a house payment, 2.5 kids and my Johnson County image to maintain!”
Of late under Dan Hesse’s leadership, much of that culture has begun to shift, but it’s not where it needs to be yet. Hesse’s done a yeoman’s job of turning that big ship around. Customer Service is on top of its game and improvement has been seen in many areas.
A close friend of mine at Sprint has engineered much of that change. But has it changed enough to make the DISH merger work? I don’t think so, and it wouldn’t all be Sprint’s fault if it didn’t.
Back in the early Nextel merger days, countless old friends and associates told me, “There’s a bullet in here with my name on it….. and someone is looking for the gun”.
If a cultural clash between Sprint and Nextel wasn’t bad enough, differences in systems, technology and processes made it almost doomed from Day
One. One of Sprint’s main strategic imperatives was its deep seeded desire to be in the push-to-talk market. They felt they needed to be in that space to attract more customers from the “trades,” the people who used PTT. Sprint’s technology at that time would have resulted in a 1.5 second delay both ways if they used their own platform. Nextel owned the PTT market.
It looked like an instant solution except for that one little detail; Sprint and Nextel shared two divergent technologies, employees, goals and – there’s that word again – cultures.
The proposed DISH merger and the Nextel merger smell like the same soup served cold one more time.
And the odd part to me is that no one seems of be having that “Déjà vu all over again” feeling.
For a better understanding of why I think this is doomed, let’s look at who DISH is. The Denver Post stated last week, “With its reputation of being one of the most difficult companies to work for in America, Dish Network’s corporate culture would probably clash with just about any potential merger partner.”
That’s encouraging.
It went on to state that, “Much of the reportedly toxic atmosphere at Dish traces to co-founder and chairman Charlie Ergen, a famously frugal billionaire and self-admitted micro-manager who had signed every company check until about eight years ago.”
24/7 Wall Street labeled Dish as the worst company to work for in America, a determination based in large part on submissions to the employer-review site Glassdoor.com.
In a Kansas City Star full page letter to whoever the hell cared, Ergen said: “We look forward to the opportunity to work together with Sprint’s board and its management team to develop a combined vision, remaining mindful of how it will benefit customers, employees, shareholders and, of course, the Kansas City community. As things move forward, we will stay in touch.”
“He knows if he’s going to buy another company or merge with another company, it may require him to change some of the culture at Dish to do it,” said Judianne Atencio, Dish’s communications director from 1996 to 2006.
Is there an upside if the cultures can meld into one happy, dysfunctional data and telecom family?
Sure, tons of upside.
Sprint would be loaded up with spectrum – more than AT&T and Verizon Wireless combined. Sprint has 55 million customers; just think of what DISH could pump into your iPhone in the form of video and high-speed internet.
DISH/Sprint could package all of your video/data/telecom needs, all the time, in your home, on your smart phone, tablet or lap top!
A match made in data heaven? I don’t think so.
Early off the record comments from friends already list a host of issues ranging from DISH being opposed to casual attire all the way to their basic opposition to “work from home,” which so many Sprint employees now do.
And trust me, if this goes down as merger, DISH would be the partner on top!
There’s nothing harder in this world to change than “culture.”
Think about what the word means for a minute and then take a look through these rose colored merger glasses. It doesn’t matter if the culture issue is “East of / West of Troost” or if it’s opposite sides of the boardroom table. There really is no difference.
Culture brought down one merger, why would this one be different given all we’ve seen so far?
DISH doesn’t even look like a good one night stand, let alone marriage material when it comes to Sprint.
I’ll follow up with another review of this little high finance biz fest as things progress.
Sprint posts lowest new subscriber numbers in 4 years, moves just 1.5 million iPhones
Read more: http://www.digitaltrends.com/mobile/sprint-lowest-new-subscriber-numbers-years/#ixzz2RPklHSPS
Follow us: @digitaltrends on Twitter | digitaltrendsftw on Facebook
THIS IS TURNING THE SHIP AROUND? WHAT SHIP. THE CARNIVAL
CRUISE SHIP THATS UPSIDE DOWN IN THE GULF?
These guys don’t know how to run a company…except in the ground!
The writer says “good job”…i say someone needs to take over that
company and get it straigthened out AND FAST.
Maybe dish will come in and show these sprint people how to run a
company. And dish is starting to sell advertising ontheir systems so
theres gonna be additional big money coming in.
THIS IS WAS PEOPLE CALL RIGHTING THE SHIP!
bring back the original owners…they knew how todo it.
I will be giving my financial paper in may which will go into details
about this…stay tuned.
Going to publish it here d u m b a $ $?
Sounds very much like what happened at ACC and LYO.
You can change all the players in a company which is failing. But unless you also change the culture it is FUBARed.
I alway reasoned SPRINT bought NEXTEL as much to squash a competitor as to build business.
That was kinda my thought. Plus try and build a bigger telecom company to be competitive with Verizon and AT&T.
Interesting Wilson! Thanks for sharing.
Maybe these idiots need to read The Prince by Machiavelli and Art of War by Sun Tzu when developing M&A strategy. Screw Wharton and Kellog boys and girls. Those are the only two books that you need to read AND UNDERSTAND in order to be successful in business. A good Jewish accountant won’t hurt either.
Oh yeah. The one thing you have to have in business is not money, a product, a service, or an idea. IT’S CUSTOMERS. All else fails without that component.
I digress.
Always thought Esrey and Forsee were total buffoons.
Will never forget back in ’89 or ’90, watching TV with a friend of mine who was a big deal at Sprint. Commercial came on for ION. Asked him what the hell that was. He couldn’t really explain it to me in a way that made business sense. Sprint spent $3B ramping it up and another $2B shutting it down. Epic fail and no big heads rolled that I can recall.
Like the mighty cockaroach it appears that nothing can kill Sprint.
Sprint: Born to be bought out.
Only a few will be happy with the eventual results.
This Dish acquizition sounds about as bad as when Sprint bought Nextel.
Smarty, Forsee is actually a really nice guy! Esry never really saw himself as a KC guy.
And, Dude, that was my point exactly.
Paul, he may be a nice guy but I never thought he was the right guy to lead Sprint. The Nextel merger being one piece of evidence of his failed vision and leadership.
He also made several Worst CEO’s list(s)
Shortly after he went to MU he got caught playing footsie with Neal Patterson from Cerner….where Gary’s son also happened to work. Some sort of IT insider deal on health care information services. That was a highly under reported story.
Ah but Paul, would I be out of turn to suggest that you told me Forsee was in over his head? Nice guy or not.
No, that would not be out of turn at all; I felt that at Sprint and MU. But I also added, I have more respect for him than most any local execs from one standpoint; when it was announced his wife had cancer, he walked away. Too many are so far caught up in the game they would be trying to plan a surgery or funeral around a staff meeting. No matter what else he did or didnt do, I have to give him props for that. Not that props from me mean anything…. but you get my drift.
forsee was a great guy. Saved some investment homes in columbia
for me on ashland gravel road right next to the stadium.
His wife was lovely and hewas a brilliant guy. Met them at
a breakfast meeting. Told me of his plans for sprint.
We met later in columbia and he lifted domain on some of
my properties that the university tried to take.
Great guy…but sprint has still got 50 plus million phones..
big big money…hop[e they survive but it’s always been
a battle with them.
Fair enough, but given the amount of money he walked away with and the fact that he was probably in over his head at MU, I tend to be a bit more skeptical of his departure. Like maybe he was looking for a graceful out and…
The bottom line is that Sprint will never be an elite company until they can begin to recruit and retain the best talent right out of graduate school. Take someone who went to a top 15 CS or engineering grad program and show them a Sprint starting salary.
It is common knowledge now that everyone who works at Sprint is eventually fired (including our genuinely coiffed Scribe Paul Wilson). Take the one week severance for every year you worked there and it doesn’t make many brilliant young people in their 30s want to work there.
50k to start at Sprint with no job security, no 401k match, no vesting options is a laughably bad deal to anyone else with an offer. It isn’t even comparable to Cerner or Garmin offers, much less San Jose/Santa Clara/Silicon area offers.
I’m a man of letters not of numbers but I believe the old adage is “garbage in, garbage out”.
balbonis, you make some good points, but when I left, I walked out with 6 months full salary, benefits, my bonuses and an office on the Plaza for the entire 6 months, free and clear. I was ready to go, I knew I was moving into my own gig anyway, and it was a great springboard into doing my own thing.
Will they ever be what they were, I dont know, but I doubt it. Some things, like customer service, is better than its ever been. JD Power awards quarter after quarter and when Dan got there, not the case. He did that as his first job.
And, Balbonious; genuinely coiffed? Interesting.
I think our old scribe had credibility issues with his ‘do…and I’ve seen your gmail headshot Paul.
I enjoyed this article a lot, my criticisms of Sprint notwithstanding. It’s not my industry but I’d really like to see KC not lose another fortune 500 company.
I appreciate that. (the fact you enjoyed the article, not my stunningly manly headshot!)
Wasn’t their another potential suitor for a Sprint merger? Do you think they would have been better?
Mike, the other one is SoftBank; Ill look at them Friday if all goes well.
So you’re going to make me wait! I hope you are not soft on them, but I am banking on you dishing it out on them as well. As soon as I sprint home from work tomorrow, I am going to see what you have to say about it.
I have NO words…… you took them all.
Speaking of Sprint mergers, let’s not forget that proposed Sprint/MCI WorldCom merger that died a lucky death! If that had gone through, it’s doubtful there would be an entity called Sprint today!
Also, while as not bad as some other providers, the Dish Network “dog” has it’s share of fleas. As a former Sprint contractor, I hope it works out for everyone…but I think Mr. Wilson makes some great points!
Thanks, Matt. You know better than anyone, having been there. You couldn’t be more right on the MCI issue. I served on several committees with Bernie Ebbers prior to him taking his downward spiral. I’ve thought about sending him a letter at his summer home in Louisiana, but never have. I liked the guy a lot, he was funny, interesting, but you never can tell what someone is willing to do in the end.
Had MCI taken over, the campus could have ended up what the late Tom Leathers said he would like to see; put chain link fencing around it and make it Section 8 housing, right there in the middle of Leawood! Thanks for your comments, Matt. Always nice to have people speak up who know something about the story!
Lunch at *the* PAN PAN!? Lol! -falls on floor-
“When in Kansas City and on the prowl for feline fare, look no further than the bowels of the Muehlebach hotel!”
“.25 stars” – KC Star //// “Don’t eat here” – Food Network /// “Some people sleep in the kitchen after closing time” – Mancow
I like THE Minsky’s a lot better. Well it’s not the same so let’s go to THE Nara. Yeah that’s it.
(getting back up) Yeah ok…so here is another fun fact. Sprint still buys enterprise software one license at a time. For those of you who are like “??” — For a large company this is the same as buying your coffee sweetener one packet at a time. It has cost them BEELIONS of dollars.
I love people that work at sprint, I just have no idea how they function as a for profit business. I agree that customer service was a huge problem for them and they have really done a great job correcting that according to EVERYONE that works there. But they also say they bled so many customers it may be too late.
Oh and then there is the dropping of calls while driving next to the sprint campus. WTF?!
Actually, Brother Sunday, you caught an error. In my haste to get this written, I misspelled it. What I was referencing was the great, old “Pam Pam Coffee Shop” at the Alameda…… For years it was the power broker early morning coffee stop in this city, and its not at the Muehlebach. It was THE spot until the Intercontinental did away with it and the Spanish decor theme at the Alameda. It was Paul Hensons regular stop back when he ran the show and the company had a heart.
And thanks for backing up my main point; some slow readers don’t follow along well. When I was giving kudos to Hesse it was centered on how he really has turned around customer service. JD Powers world class award winner now, quarter over quarter, but you’re right, they are woefully plagued in so many other areas. It will never, ever be what it once was.
Thanks for your comments.
Forgive me, sir. I incorrectly believed you were referencing the pet store that served Chinese food on 12th street.
http://www.urbanspoon.com/r/34/381628/restaurant/Downtown-Loop/Pam-Pam-Kansas-City
http://www.yelp.com/biz/pam-pam-restaurant-kansas-city-2
Related? Separated at birth?
Neither related or separated at birth…just seems to be a pretty common name whether you’re serving dog or coffee I guess. Thanks again, no apology needed!
(I can’t believe my Editor didnt catch that….. blue blood that he is)
He was in awe of your story
Nice one, Super Dave….. I just thought with all that Blue Blood… he’d find and fix that one. Hearne was likely born in a suite there! I was running 90mph or I would have caught it! But Im going with your excuse, I like it better.
I did recognize the name but didn’t catch the typo.
Never was my kinda place, I wasn’t into the power breakfast scene personally. I was and am aware of some of the places that were hot though. Parkway Grill on the Plaza, Meirhoff’s