Sprint's Esrey Uses Technology to Remake Company
Westwood, Kansas, Dec. 22 (Bloomberg) -- Sprint Corp. Chief Executive William Esrey almost became a surgeon.
He spent high school vacations watching a physician neighbor in the operating room. Yet with medical school and specialty training, he wouldn't practice until age 30 -- which seemed like ``forever'' when Esrey finished high school at 17.
Instead of stitching up arteries, veins and vital organs, Esrey earned an MBA from Harvard and pieced together deals at investment bank Dillon, Read & Co. In 1980, he arrived in Kansas City, Missouri, to transform a small rural telephone company known as United Telecommunications Inc.
As a banker, ``you're advising other people,'' Esrey said. ``Here, you're actually doing it. That's more fun in the end.''
For two decades, Esrey performed corporate surgery: swapping assets with GTE Corp. to create a nationwide long-distance network, shedding United's wireless unit only to buy it back with local assets from Centel Corp., taking risks on untested new technologies for mobile-phone and high-speed Internet links.
Esrey's efforts caught the attention of rival Bernard Ebbers, who built WorldCom Inc. by grafting on more than 75 smaller firms. Ebbers and Esrey tried to combine their companies, though they were thwarted by regulators in July.
Conventional Wisdom
Entering the long-distance market and buying out partner GTE was the first time Esrey's Sprint -- which gained its name and network from the GTE venture -- bucked conventional wisdom, which at the time held that no one would give contracts to any carrier other than AT&T Corp. It wouldn't be the last time Esrey defied convention.
``The way Sprint is wired is to go after new sources of growth and kind of break the mold and prove naysayers wrong,'' said Liane Pelletier, senior vice president of strategic planning and corporate development, in an interview last month.
The chorus of naysayers has grown since the July collapse of Sprint's agreement to be bought by WorldCom, which valued Sprint at $76 a share. WorldCom has dropped 74 percent this year, and today it fell 31 cents to $13.88. Sprint rose 75 cents to $20.75. It's down 69 percent this year.
Esrey, 60 years old, takes dissolution of the WorldCom marriage in stride, as does President and Chief Operating Officer Ronald LeMay. When Sprint missed second-quarter 1990 earnings forecasts, analysts were similarly brutal.
``Sprint is too small to survive,'' LeMay said, reciting from memory quotes he then carried in his briefcase. ``The question about Sprint is whether they can walk and chew gum at the same time.''
Their confidence amid some doubts echoes the attitude of AT&T Chairman C. Michael Armstrong, who has compared his effort to revamp AT&T to the challenges he faced developing a satellite communications business at Hughes Electronics Corp. or selling personal computers in the mainframe era at International Business Machines Corp.
Armstrong and Esrey
While Armstrong's AT&T spent more than $100 billion to buy cable-television assets, Esrey spent $1.5 billion on wireless spectrum that can deliver TV signals or high-speed data. Both were trying to bypass the large local phone companies' monopolies. To boost its stock, AT&T plans to break into four companies by 2002. Each will be smaller than Sprint, Esrey said.
``There definitely is a lot more confidence that Sprint is viable, Sprint will be successful on its own,'' after recent in- person meetings with 1,000 officers and directors, said Len Lauer, president of global markets. ``Employees are not looking to see who's the next buyer of Sprint.''
PCS Unit
After buying out GTE and Centel, Esrey shepherded the spinoff of Sprint's cellular operations as 360 Communications Co., and the creation of tracking stock for its newer PCS wireless unit, whose spectrum licenses were purchased with help from cable-television partners.
Sprint PCS spent billions of dollars on the new licenses, and bet on a new and untested wireless technology from Qualcomm Inc. known as code-division multiple access, or CDMA.
Choosing CDMA ``was a risk,'' Esrey said. ``Now it turned out to be the right one. Whether we were lucky or smart or a combination, who knows.''
Either way, CDMA is easier to upgrade than other wireless standards, Sprint PCS Chief Operating Officer Chuck Levine said. ``It's software swaps, it's adding cards to our base stations,'' he said. ``We have very little of the kind of forklift upgrade that I believe our competitors will be forced to do.''
Technology
Esrey is a gadget guru, never truly disconnected from work even on the slopes, the links or the back of his horse, where he conducted a satellite phone call with WorldCom's Ebbers during negotiations on their ill-fated transaction.
His latest toy is a Compaq Computer Corp. PocketPC, linked to Sprint's internal computer network with a wireless modem from Lucent Technologies Inc. Sprint has been testing the technology in its headquarters in Westwood, Kansas.
The PocketPC lets Esrey get his e-mail, with attachments, and access the Internet from anywhere in the building. In a management committee lunch last month, he used it to look up the real-time stock price of Sprint PCS rival Nextel Communications Inc.
Esrey said Sprint will be able to offer a service like Nextel's DirectConnect walkie-talkie feature when Sprint PCS upgrades its network for ``third generation'' service next year. He sees continued blurring of the lines between home and work, and stronger demand for services that keep customers in touch anytime, anywhere, whether voice or data-based.
Esrey said he has ``a lot more confidence that we know what we're doing,'' even with faster change in the industry and greater uncertainty than when he became chief executive in 1985.
``There's more opportunities now than I can remember,'' he said. ``There's a lot of land mines, too.'' Stepping around them with surgical precision will be Esrey's task until he retires at 65.
Dec/22/2000 16:28 ET
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