Paul Wilson: Will Sprint Sprint for the Left Coast?

Screen shot 2013-12-03 at 11.35.04 PMIt’s all the buzz…

No, not cops shooting firemen; and no, not killings in the Chiefs parking lot at Arrowhead. The town is abuzz with talk about hometown phone company Sprint moving its headquarters moving to California.

Imagine that, Softbank execs not wanting to have to fly over Silicon Valley and its growing 1,000 person R&D facility to have meetings in here Kansas City?

In flight, Son can look out the window of his G5 as he crosses the coastline at 40,000 feet and see his 9-acre, $117.5 palatial estate below. Why would he want to do that? I doubt he does. But will Sprint move?

All the armchair quarter backs and talk show hosts are playing Madam Cleo; prognosticating possible future outcomes, weighing in and opining away. One of the worst examples I heard is the line, “They moved the headquarters once before when they merged with Nextel, they could do it again!”

Well, no they really didn’t.

Former Sprint head honcho Gary Forsee had a condo in Reston and he spent time there, but a better description of those days would be that some operations were “shifted” out East in the 2005 merger.

gary_forsee

Forsee

Overland Park remained the designated operations headquarters and, let’s not forget, that whole boondoggle led to the most ineffective, poorly planned merger in telecom history.

They’ve learned a lesson in that, I assure you.

Sprint’s Dan Hesse brought all the operations back to the campus here in early 2008 as one of his first acts. His reasoning at the time was the obvious disconnect of having senior management in Reston and key operational teams in Overland Park.

Hesse knows his stuff and that move was the single most valid thing Sprint has ever done; things simply don’t work when the tower of pure thought is that disjointed.

You can discount Hesse all you like, but he’s orchestrated this Softbank move and I think it will prove to be brilliant five years down the road.

The main difference between this move and the Nextel merger?

Dan+Hesse+Sprint+CEO

Hesse

It’s not a “merger” we are talking about here, Softbank runs the show now and has a lot more involvement than most expected. SoftBank is now the source of subject matter experts and Sprint is turning to them for the technologies SoftBank uses in Japan currently.

Hey, in exchange for writing $20 billion checks, you get some clout. Which can also include choosing the city you operate from.

OP execs have already been holding regular meetings in California and Son is on record stating, “I’d like to bring Silicon Valley into the mix.  We’re bringing SoftBank capital, our know-how and myself to this.”

Softbank’s Son, who is preferential to the Coast, has claimed all along that what they build in Silicon Valley won’t replace Sprint’s current headquarters in Overland Park but rather will be focused on “innovation and procurement.”

However when you decode all the double speak, what does it really mean to the 14,500 people who reside on the Sprint campus today?

My contacts at Sprint who have spoken to me this week offered the following quotes;

“Son’s home is California; he went to Berkley, he has real estate there. Why would he want to be in Kansas City?”

“I heard we are moving to Seattle because Son and Gates are such good friends!” (That’s Bill, not Ollie)

“Sprint may have a decreased presence in the area, but the campus is still a nice real estate play with more and more of it occupied with other corporate customers, not Sprint.”

“The Silicon Valley operation will grow; attrition will lessen the campus presence, but it won’t go away.”

What your well-coiffed scribe predicts?

The last quote holds the answer, I believe. Kansas City will see a decreasing presence, but Sprint won’t move the company in total. Eventually, you’ll see Sprint housed in maybe four buildings on campus, the rest will be leased to other Kansas City firms.

I think they simply couldn’t abandon that behemoth of a campus, but do the math; it’s a tiny percentage of a percent of the purchase price – in other words, meaningless in the scheme of things.

Screen shot 2013-12-03 at 11.33.56 PMWhich brings us to the question of, do Sprint, Garmin and Cerner owe anything to this city?

Do they have to stay where they started or get a black star in their corporate permanent records? We’d all like to think so, but in the end, what they owe is shareholder return, first and foremost.

If you’re not from Wichita, you may not recall the day the fat cats who started Pizza Hut were sitting around the board room table when one of them whispered, “You guys KNOW we live in Wichita, don’t you?”

Next thing the Chamber of Commerce knew, Pizza Hut was headed out of town. So it can happen.

Five years from now, the 14,500 people on campus will look more like 9,000, it’ll happen slow and become less and less a topic of conversation.

Things change, people change, and like I said, in the end, Hesse is going to be seen for what he is, brilliant.

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14 Responses to Paul Wilson: Will Sprint Sprint for the Left Coast?

  1. Jack Springer says:

    Companies move to where the CEO lives. Look at almost any company in the country, the CEO wants ‘his’ company close to him — he doesn’t want to commute.

    I predicted the move to California when the buyout happened — so it’s not a surprise. I wonder how many people at Sprint now hope that Dish TV was the buyer. Sprint continues to be a joke of the cell phone industry — bad or not available service.

    The next to move is AMC. The Chinese will see no need to fly to the middle of the country when they can land in California — plus it’s near the movie action — only makes sense.

    Kansas will have lots of empty buildings and houses to fill in the next decade. All the freebies they’ve given to AMC and Sprint will come back to haunt them.

    A state buying business doesn’t work. Karma.

    • paulwilsonkc says:

      The converse of that, Bill Esrey was CEO, but preferred his California/Colorado homes and Country Club memberships to KC. (You always have a contrarian, Jack….)

    • admin says:

      There is one wild card, gentlemen…

      And that’s that companies are abandoning states like California in hordes because of the high cost of living, taxes, poor public services.

  2. Orphan of the Road says:

    Calling Sprint’s buying out Nextel a merger is like saying the St Valentine Day Massacre was a slight difference of opinion.

    The low cost of operation should keep them here for awhile as long as they can keep moving forward.

    If the real estate market were to get hot again it might make moving the business less daunting.

    Sprint has stopped the bleeding of customers with better service although reliability is still a major problem.

    When my company was bought out (by a smaller business no less) the previous world headquarters and r&d site went from over 2000 employees to less than 500 in a couple of years. But that was a very nasty buyout which was triggered more by ego than by rational business sense.

    Hard time for the employees. Having to live with uncertainty of their jobs is rough on families. Hope they aren’t the collateral damage as in so many mergers.

    • paulwilsonkc says:

      Orphan, having been a Director at Sprint for a number of years, I was one of the earliest of early customers of “Sprint PCS” as it was called in the day. As a result, I’ve lived through some horrific billing, service and customer care issues.
      When Hesse came in, that all began to change. A close friend of mine is a key player in customer care; it’s all turned around.
      Today, I don’t get the claims of poor or no service. I rarely have a problem of any kind. There are three dead spots I’m aware of in parts of the city I frequent and they are literally several yard to 100 foot stretches where service can be sketchy. I have NO signal problems at all unless I’m in areas you’d expect them, like an elevator or the fringe of service areas they clearly disclaim.
      And hey, they laid me off; no secret alligience here, outside my future retirement package!

      • Orphan of the Road says:

        Once you get a bad tag it takes a long time to get your good name back.

        Sprint has stopped the sucking chest wound of departing customers. That is excellent but convincing the non-customer the bad service/signal problems are in the past is very, very tough.

        Hope it all works out for the employees sake.

    • Jack Springer says:

      I no longer have any friends, family, or acquaintances that have Sprint. Unless you live in a major city and only travel on Interstate highways — there is no service.

  3. the dude says:

    Git cher bags packed and yer homes on the market Sprint employees!!
    What’s left after the next round of layoffs of course!!

  4. balbonis moleskine says:

    Honestly, goodbye and good riddance. Sprint turned OP from a quiet, wealthy, suburb with single lane roads to an overcrowded mess with too many apartments, too high of taxes and an undeserved sense of superiority.

    We all love Paul around here and they made him rich. But this was a mediocre company that shaped OP over the last 20 years- not in a good way.

    By the way, they never paid a dime of taxes on their “campus”- they got it zoned agricultural. That’s why your property taxes were so high. They were a PCS innovator that needed government cheese to stay on life support. Let the Japs take this company out behind the barn and bash it’s head in with a shovel.

    • BB says:

      Japs? Wow. Dumb redneck.

    • paulwilsonkc says:

      Balbo, it is “agricultural;” havent you seen the signs out there in the landscaping where it says “native grasses?” How much more agricultural can you get?
      And I have to correct your “Japs” comment, not that BB hasn’t already B-slapped you, this one goes to the Chinese, you have to keep all yer “orientals” straight. I know, its hard enough for you get read one of my pieces as it is, I really appreciate you commenting.

  5. Beth says:

    Once upon a time ago……
    Fairy tales don’t exist anymore. No one in the telecommunication industry is safe.

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