KANSAS CITY, Mo. – Tim Donahue, executive chairman of the Sprint Nextel Corp.'s (S) board of directors, will step down Dec. 31, the company announced Tuesday without naming a replacement.
Donahue, 57, was chief executive of Nextel before Sprint acquired the company last year for $35 billion, creating the nation's third-largest wireless company with more than 40 million wireless customers and $40 billion in annual revenue.
The company has hit a rough patch of late, however, with weak second-quarter earnings report and the ouster of Len Lauer, a veteran Sprint executive, as president. Sprint Nextel's stock hit a 52-week low in August when the company announced a 38 percent drop in quarterly earnings and disappointing subscriber growth and troubling customer loss rates. The news led to a downgrade in Standard & Poor's credit rating on the company.
In Tuesday trading, the company's stock rose 10 cents to $18.18 on the New York Stock Exchange, where it has traded in a 52-week range of $15.92 to $26.89.
Donahue, who has been in the telecommunications business for more than 20 years, said the new company is in good hands and he was "confident the promise of the merger will be realized."
"Instead of being in the thick of the action, it's time for me to start cheering Sprint Nextel along from the sidelines," Donahue said in a company news release.
Sprint spokesman David Gunasegaram said Donahue's retirement was not a surprise and he had worked with Sprint Nextel President and Chief Executive Gary Forsee and the board to decide a date. Gunasegaram said a replacement would be named after company leaders have time to consider all candidates.
"The decision was completely voluntary," Gunasegaram said. "It was just the right time for Tim and his wife."
Jeff Kagan, telecom industry analyst based in Atlanta, said such a retirement is typical after two companies merge. He said he didn't think it was connected with Lauer's ouster.
"CEOs are like two captains of two ships," Kagan said, "And there really can only be one captain on a ship."
Sprint Next, based in Reston, Va., with operational headquarters in Overland Park, Kan., also announced Tuesday that Robert R. Bennett, former president and chief executive officer of Liberty Media Corp., to serve on the board, effective immediately. He currently is president of Discovery Holding Co., which was spun off from Liberty Media in 2005.