- The Washington Times - Tuesday, October 10, 2006

KANSAS CITY, Mo. (AP) — Sprint Nextel Corp. yesterday announced that Tim Donahue is leaving as chairman of the cell-phone carrier. It was the second unexpected departure of a top executive in six weeks.

The company did not name a replacement for Mr. Donahue, 57. He was chief executive officer of Nextel before it was acquired by Sprint last year for $35 billion, creating the nation’s third-largest cellular provider with more than 40 million wireless customers and $40 billion in annual revenue.

Mr. Donahue’s resignation surprised some analysts, but Sprint spokesman David Gunasegaram said there had been speculation since the two companies merged that Mr. Donahue would stay for only two years. Mr. Gunasegaram stressed that the resignation was voluntary and had been expected internally.

The announcement came on the heels of a recent rough patch, including a weak second-quarter earnings report and the sudden ouster of Len Lauer, a veteran Sprint executive, as president.

Sprint Nextel Chief Executive Officer Gary Forsee took over Mr. Lauer’s responsibilities. Mr. Forsee and Mr. Donahue orchestrated the merger of the two companies.

Shares of Reston-based company are down about a third from their 52-week peak. They slipped 4 cents to $18.04 in Trading on the New York Stock Exchange after sliding as low as $17.55 immediately after the news.

The stock plunged in August when the company reported a 38 percent drop in quarterly earnings, disappointing subscriber growth and troubling customer-loss rates. The discouraging report led to a downgrade in Sprint’s credit rating by Standard & Poor’s.

The departure of Mr. Donahue, a Nextel executive since 1996, “will make the integration of Sprint and Nextel that much more challenging,” said Greg Miller, a telecommunications analyst with Deutsche Bank.

Mr. Miller said losing someone with Mr. Donahue’s knowledge of Nextel’s unique network technology — far different from the more common wireless standard used by Sprint — “indicates to us that a turnaround in operations is not likely right around the corner.”

Mr. Donahue, who has been in the telecommunications business for more than 20 years, said that the new company is in good hands and that 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,” Mr. Donahue said in a company press release.

Mr. Gunasegaram said Mr. Donahue had worked with Mr. Forsee and the board to decide a date for his retirement. Mr. Gunasegaram said a replacement would be named after company leaders have time to consider candidates.

“The decision was completely voluntary,” Mr. Gunasegaram said. “It was just the right time for Tim and his wife.”

Sprint Nextel, which has its operational headquarters in Overland Park, Kan., also announced yesterday the addition of Robert R. Bennett, former president and chief executive officer of Liberty Media Corp., to serve on the board, effective immediately. He is president of Discovery Holding Co., which was spun off from Liberty Media in 2005.

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