Forsee Out at Sprint Nextel

Updated from 4:52 p.m. EDT

Gary Forsee is stepping down as CEO of Sprint Nextel (S) effective immediately, just days after a report emerged that his replacement was already being sought.

Forsee had served as the company's chairman, president and chief executive, and a committee of the Sprint Nextel board has been formed to conduct a search for a new chief.

James Hance Jr., a member of the board, will take on the role of acting nonexecutive chairman, the company said Monday afternoon. Paul Saleh, Sprint Nextel's chief financial officer, will be interim CEO until a permanent replacement for Forsee is named.

Forsee's departure doesn't appear to have been solely his choice, and indeed Sprint Nextel director Irvine Hockaday said in a press release that the decision to seek another CEO was based on the board's belief that the time was right "to put in place new leadership to move the company forward in improving its performance and realizing corporate objectives."

The Wall Street Journal had reported last week that Relational Investors, a San Diego-based activist investment shop, was pressing the company's board to take action.

The hunt for a new CEO will focus on candidates outside the company, Hockaday's statement said.

"We fully expect that the search will be concluded in a timely manner, and we are focused on selecting the right candidate to guide the company to achieve its full potential," he said. "Sprint Nextel has the assets, spectrum, customer base and technology to be the leader in wireless mobility services."

Additionally, the Reston, Va., telephone company said it will likely report a net loss of approximately 337,000 post-paid subscribers in the third quarter. At the same time, Sprint Nextel cut its forecast, saying both consolidated operating revenue and adjusted operating income, before items, for 2007 will be slightly below its previous guidance.

Sprint Nextel had projected adjusted operating income of $11 billion to $11.5 billion and revenue of $41 billion to $42 billion for this year. The company will release its third-quarter financial results on Nov. 1.

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