Earnings: Sprint CEO Hesse: Issues "More Difficult Than What I Expected To Find"

As expected, Sprint (NYSE: S) Nextel has announced its own unlimited plan, although not quite at the firesale prices some had expected. Instead, they're throwing in the kitchen sink. The basic offer of the "Simply Everything" plan: unlimited voice, data, text, e-mail, Web-surfing, Sprint TV, Sprint Music, GPS Navigation, Direct Connect and Group Connect, all for $99.99. And it will be available to existing subscribers starting tomorrow. (Full details in a separate release." New CEO Dan Hesse and team tool questions from analysts after the Q4 earnings were released. Some highlights from the call:

-- As for the problems facing the company, new CEO Dan Hesse put it out pretty clear when he jumped on the call: "The issues we face are more difficult than what I expected to find."

-- Data: The management team must've stated some variation on 'data is the future' at least 10 times on the call. Of course, given the deterioration of the voice business, what else would they say? Hesse admitted that the new unlimited plan, by itself, wouldn't change the (downward) trajectory of the business, rather, "We're putting a flag into the ground that we intend to own the data world." Data revenues continue to grow at double-digit rates, and now account for about 20 percent of ARPU, but the gains are not offsetting the decline in voice revenues. The leading sources of data revenues are: air cards, text messaging and Power Vision bundles.

-- Churn: Hesse repeatedly stressed the company's intention to improve the customer experience and staunch the bleeding. How are they going to do that? The new offer, effective immediately, is obviously a part of that. But other measures are either as-of-yet unformulated or at least undisclosed. Hesse: "I will share with you more of our action plans next quarter."

-- Customer service: Sprint is implementing specific projects to reduce calls to customer care and holding weekly performance reviews. "Because of the customer experience we provided last year, churn is accelerating," Hesse said. "As you may know, we have performed poorly in customer surveys that were taken last year. This has hurt our brand. We have done much to improve the network and care issues which drive customer dissatisfaction, but there is much more that still needs to be done.

-- WiMAX: It's important to Sprint's future, but you'll have to wait for another time if you want more details.

-- Outlook: Patience is key: "We will have a difficult 2008, as we turn this ship around." As stated a few times, there are no quick fixes to clearing out the rot. Oh, and while they're at it: No more dividend. Not surprisingly, none of this is going over very well. Investors aren't too keen on the patience idea and are sending Sprint stock down over 11 percent in early action.