SCOTT SIMON, Host:
Joe Nocera, columnist with the New York Times, joins us from New York. Joe, thanks for being with us.
JOE NOCERA: Thanks for having me, Scott.
SIMON: Sprint Nextel has been snakebit in recent years, haven't they?
NOCERA: Well, they snakebit themselves. I mean, you don't lose $30 billion by accident. But what this writedown really is, it's really an accounting number that acknowledges that the Sprint Nextel merger of about three years ago has been a giant, colossal, total fiasco, a $30-billion fiasco.
SIMON: Did they go wrong in trying to expand their subscriber base so much?
NOCERA: You know, then they went out and got customers, basically, who couldn't pay their bills, and one of the shocking things that came out Thursday was that they've lost a million subscribers this year, and they're probably going to lose another million in the next quarter. So they've got problems.
SIMON: How do you recover from a $30-billion loss in one quarter, or do you?
NOCERA: The real issue here is not that they have a $30-billion loss but that they've had to draw down their line of credit. They're going through cash, you know. The issue is not $30 billion. It's like where are they going to be two years from now if they don't stop the bleeding?
SIMON: Bankruptcy?
NOCERA: It could be. I mean, it's hard to believe. This is the third largest wireless company in the country. They have 50 million subscribers, and...
SIMON: You ought to be able to make money with 50 million subscribers.
NOCERA: You really ought to, but one of the things that's happening, and this is kind of - this is the one thing that you can't blame on them - is that, you know, everybody who needs a cell phone has one. It's not a growth industry anymore. So now it's about poaching each other's customers, and the business has gotten tighter and tougher, and so you have to be a better competitor, and Sprint Nextel is not a good competitor. That's the bottom line.
SIMON: Will heads roll, or lots of golden parachutes?
NOCERA: You know, the CEO has had the job for two months, Scott.
SIMON: This is Daniel Hesse.
NOCERA: Yeah. He's had the job for two months. He got it because they couldn't find anybody else. The number two, they can't - they haven't been able to replace the number two because nobody wants the job. They can't really roll heads and find somebody to take their place. It's an unbelievable situation.
SIMON: When the history of mergers is written, where will this be, the worst of all time, or...?
NOCERA: But history is filled with bad mergers. CEOs love to merge. They love to make deals. They love to build their empire, and then after they do it, they realize oops.
SIMON: Thirty billion dollars later, over three months.
(SOUNDBITE OF LAUGHTER)
NOCERA: Exactly.
SIMON: Joe Nocera, columnist for the New York Times. Whoops. Thanks very much.
NOCERA: Thanks for having me, Scott. Transcript provided by NPR, Copyright NPR.
