Sprint Corp.

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Sprint Corp.

founded: 1938

Contact Information:

headquarters: 2330 shawnee mission pky.
westwood, ks 66205 phone: (913)624-3000 fax: (913)624-3281 url: http://www.sprint.com

OVERVIEW

As a major international telecommunications company, Sprint has been in the forefront of the integration of local, long-distance, and wireless communications services. The company is also the world's largest carrier of Internet traffic. Within the United States, Sprint is the third largest long-distance services company, trailing AT&T and MCI. Sprint is also a major provider of local telephone service, second only to GTE among the non-Baby Bell local telephone services.

Not content to rest on its laurels in the traditional telecommunications industry, Sprint has been actively pursuing opportunities opened up by innovative new technologies. Sprint PCS, an all-digital wireless telephone network, is a product of Sprint Spectrum, Sprint's joint venture with TCI, Cox Communications, and Com-cast. The partners in Sprint PCS, which already serves about 1 million customers, hope eventually to extend the service to the 100 largest U.S. markets.

In February 1998 Sprint announced an agreement with Earthlink Network Inc. for the two companies to merge their Internet access services. Sprint is also interested in providing local telephone service over cable television systems and is seeking cable television networks with which it can partner to pursue this project.

Sprint's long-distance division is the largest in the United States utilizing the latest in fiber-optic and electronic technology. In addition to long-distance services, Sprint provides domestic and local exchange telecommunications services, distributes telecommunications products, and publishes and sells telephone directories.

Sprint is a growth-oriented company that believes it must constantly change to remain competitive. The company has used its brand image to aggressively pursue new markets. J. D. Power and Associates named Sprint number one in customer satisfaction among long-distance users.

COMPANY FINANCES

In 1997 Sprint posted net earnings of $953 million on revenue of $14.87 billion, compared with net income of $1.18 billion on revenue of $14.05 billion in 1996. Per-share earnings of $2.18 in 1997 were down sharply from $2.78 in 1996. For 1995 the company recorded a net income of $395 million on revenue of $12.77 billion, compared with net earnings of $891 million on revenue of $12.66 billion in 1994. Per-share earnings in 1995 and 1994 were $1.12 and $2.58, respectively.

In 1997 long-distance services accounted for 57 percent of Sprint's total sales, while local telephone services brought in 34 percent, and the publication of directories and product distribution generated 9 percent of total revenue.

ANALYSTS' OPINIONS

Sprint announced its decision to combine its Internet access services with those of Earthlink in February 1998. The agreement, analysts said, bolsters Earthlink financially while easing the financial burden on Sprint. Allen Weiner, an analyst at Dataquest in San Jose, California, was quoted in the Los Angeles Times as saying: "Earthlink has been great on ideas, great on marketing, but short on cash. Here's some cash, here's some clout. It helps propel them to the top tier of Internet service providers in the country."

HISTORY

In 1899 Jacob Brown and his son, Cleyson, who ran an electric utility, were given permission by the city of Abilene, Kansas, to start one of the first non-Bell telephone companies in the western United States. The two had 1,400 customers by 1903.

In 1905 Cleyson Brown started the Union Electric Company in order to sell telephone supplies. Home Telephone and Telegraph, a long-distance service, was formed in 1910. Cleyson decided to merge with other Kansas independent phone companies to form United Telephone Company in 1911.

With the onset of World War I, labor and materials became scarce, and growth was slow until after the war. Cleyson sold the electric utility in 1925 and incorporated United Telephone and Electric. Cleyson Brown continued to acquire other small phone companies despite a loss of customers during the Great Depression.

During World War II, again material and labor were limited causing order backlogs and acquisitions were postponed. In 1952 acquisitions resumed with the purchase of Investors Telephone. Carl Scupin took over the management of United Telephone and Electric in 1959.

In 1964 Paul Henson became president and turned the company toward satellite communications, nuclear power, and cable TV. Henson purchased the oldest independent telephone supply company in 1965, called North Electric. In 1967, in order to institute batch processing and time sharing, Henson acquired Automated Data Service. United Business Communications also was purchased in 1970 to market telephone and data hardware.

In 1971 Henson decided to change the company name to United Telecommunications. The company flourished throughout the 1970s during industry deregulation. United purchased 50 percent of GTE's long-distance company, GTE Sprint, in 1985 and acquired another 30.1 percent in 1989. When the last 19.9 percent of GTE was purchased by United in 1992, United changed its name to Sprint.

In 1996 Germany's Deutsche Telekom and France Telecom each purchased a 10-percent share in Sprint. The $3.6 billion paid by the two provided Sprint with some much needed capital for pursuing its nationwide PCS network, an all-digital wireless telephone network venture in which Sprint was partnered with Cox Communications, Comcast, and TCI.

In 1998 Sprint combined its Internet access business with that of Earthlink Network Inc. The resulting combination created a customer base of more than 600,000 and positioned the merged Internet service to pursue the top spot in this business, now held by AT&T.

STRATEGY

Sprint's strategy includes brand name recognition. The company has begun to put the Sprint brand name on all of its products and services. The idea is to become a well-known brand in the marketplace of long-distance, local, wireless, and Internet services.

Sprint is committed to developing new technology. The company joined Bellcore, a research group for the regional Bell operating companies.

Sprint looks for the best ways to market their technology. In 1994 Sprint sponsored the World Cup and used its technology to assist media coverage. Sprint became known as the "true communications link for the World Cup." The company has used this example of its sponsorship to market to businesses needing this type of communication.

Sprint also has marketed this type of plan to residential customers with its "In Touch" program. The "In Touch" program allows customers to dial an 800 number and hear information about their favorite sports and events. Sprint intends to bring this technology and the sports fan together and use the 800 line to market its long-distance service.

Sprint aggressively pursues new opportunities. In 1996 frame relay services became more popular. Frame relay offers companies high data exchange rates with flexible monthly pricing. Sprint began dropping prices to attract more customers. The idea was to get customers interested in frame relay services and then entice them to buy a package deal including other data and phone services.

Sprint has also teamed up with Radio Shack. The company opened up stores within Radio Shack to sell long-distance and local telephone services, wireless communication services, Internet access, paging, telephone sets, and prepaid phone cards.

Sprint is also targeting new markets including the health care industry. In 1996 Sprint and Saint Luke's Shawnee Mission Health System teamed up to design a comprehensive health care network. The network aimed to put patient information at the fingertips of doctors, nurses, and administrators.

FAST FACTS: About Sprint Corp.

Ownership: Sprint Corp. is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: FON

Officers: William T. Esrey, Chmn. & CEO, 58, $1,000,000; Ronald T. LeMay, Pres. & COO, 52, $602,966; Arthur B. Krause, Exec. VP & CFO, 56, $594,494

Employees: 51,000

Principal Subsidiary Companies: Major subsidiaries of Sprint Corporation include: Sprint Internet Passport; Sprint North Supply; Sprint Paranet; and Sprint Publishing & Advertising.

Chief Competitors: Within the telecommunications and Internet services industries, Sprint's major competitors include: America Online; Ameritech; AT&T; BellAtlantic; BellSouth; BT; Cable & Wireless Communications; Century Telephone; Frontier; GTE; IBM; MCI; R.R. Donnelly; Telco; Telephone & Data Systems; U.S. WEST; and WorldCom.

Sprint's decision to join forces with Earthlink in the business of providing access to the Internet puts the two companies' combined operation in a very strong position to take on AT&T for the number one spot in the online access field. Under the agreement, the Pasadena, California-based Earthlink gets Sprint's 130,000 online access customers, giving Earthlink more than 600,000 in Internet subscribers.

INFLUENCES

Growing competition has challenged Sprint. In 1990 Sprint decided to zero in on the residential and small-business markets. Candice Bergen was chosen as spokesperson for the company's long-distance service. The actress and Sprint's catchy ads have kept customers loyal.

In 1995 the "dime a minute" campaign was started. To compete, AT&T introduced its flat, no-restriction, $.15-per-minute rate. Sprint highlighted the $.05 difference in price despite its peak-time rate of $.25 per minute. In 1996 Sprint had the highest percentage of customer loyalty in long-distance and continued to promote the long-distance plan's simplicity and savings.

Sprint strategists have long recognized that in order to be a world player, the company must be involved in every aspect of telecommunications, including local and long-distance, wireless and wired, international, and Internet services.

CURRENT TRENDS

In 1996, long-distance companies began to believe that flat rates weren't popular anymore and that integration of services would be the demand in the future. Sprint plans to continue to advocate the simplicity of the "dime a minute" plan and offer new service packages as well. Since the plan has worked very well for Sprint, the company sees no need to make any major changes to it.

Sprint Chairman William T. Esrey has used partnerships strategically to make Sprint's capital go further than might otherwise have been the case. Sprint's alliance with Deutsche Telekom and France Telecom in Global One is a perfect example of just such a partnership. Global One is a worldwide telecommunications service catering to both travelers and multinational corporations.

PRODUCTS

Sprint offers long-distance and local telecommunications services. In 1994 sales of long-distance and local services accounted for 86 percent of Sprint's business. The company also distributes telecommunications products, publishes directories, and provides cellular and wireless communications services. Sprint plans to expand its wireless and wired telecommunications services through phone and cable networks.

CHRONOLOGY: Key Dates for Sprint Corp.

1899:: Jacob and Cleyson Brown start a telephone company in Abilene, Kansas
1905:: Cleyson Brown starts the Union Electric Company
1910:: Forms Home Telephone and Telegraph
1911:: Cleyson merges his company with other independent phone companies to form United Telephone Company
1925:: Sells the electric utility and incorporates United Telephone and Electric
1934:: Cleyson Brown retires
1952:: Acquires Investors Telephone
1959:: Carl Scupin takes over United Telephone and Electric
1964:: Paul Henson becomes president
1970:: Purchases United Business Communications
1971:: Changes name to United Telecommunications
1985:: Purchases 50 percent of GTE Sprint
1989:: Purchases 30.1 percent of GTE Sprint; introduces Total Quality Management
1992:: Purchases the remaining 19.9 percent of GTE Sprint; changes company name to Sprint
1993:: Joins the Bellcore research consortium
1994:: Sponsors World Cup
1996:: Deutsche Telekom and France Telecom each purchase 10 percent of Sprint
1998:: Announces agreement with EarthLink Network Inc.

CORPORATE CITIZENSHIP

Sprint is involved in many communities in which it does business. During the early 1996 storms and flooding in the Midwest, Sprint employees jumped into action. Taking an independent Total Quality Management approach, workers immediately began repairing damage to downed cable lines in order to put local customers back in touch with their loved ones.

Sprint encourages its employees to take an active role in community service through company-sponsored Community Relations Teams and Pioneer Clubs. The company reported that in 1997 volunteers in these groups completed more than 4,000 community projects nationwide, logging more than 100,000 hours of community service. Among the projects undertaken were the collection of food and gifts for those in need during the holiday season, the refurbishing of housing for the elderly and disadvantaged, and the building of school playgrounds.

GLOBAL PRESENCE

Sprint has a well-known international presence. With SprintNet, the company has created the largest integrated global data network in the world. Global One, Sprint's partnership with Deutsche Telekom and France Telecom, offers seamless telecommunications services around the world. The recent merger of Sprint competitors WorldCom and MCI will give Global One an unexpected boost. Under the terms of the WorldCom/MCI agreement, MCI is required to sell its 25-percent share in Concert, its global partnership with British Telecom (BT), back to BT. At the same time, BT will lose its U.S. partner. Of this bonus, Sprint Chairman William T. Esrey, interviewed by Forbes magazine, said: "It's sort of a little gift, from our point of view."

EMPLOYMENT

Sprint promotes from within whenever possible and offers a career development plan to its employees. The plan includes a Management Rotation Program. Sprint evaluates employees for promotion on a regular basis. The company offers summer internships and work-study programs for students.

SPRINT: ACTIVITIES ABOUND

Sprint employees regularly participate in company-related group activities and consistently give generously to their surrounding community. Projects include National Fun at Work Day, volunteer tutoring programs for children, and food drives.

Of all participating companies, Sprint has the highest number of employees participating in National Fun at Work Day annually. The activities vary from year to year, but the event is usually very festive, involves team-work, and includes prizes. According to Margery Tippen, vice president of small business marketing for Sprint, "At Sprint, we believe that fun and work are not incompatible concepts, and when combined in a positive manner, can motivate associates to stay focused on a company's core principles."

Along with playing hard, employees also work hard—and not only at their jobs. Thousands of Sprint employees serve their community in Sprint-related groups. Through Junior Achievement, School-to-Career, and Adopt-a-School partnerships, employees volunteer their time to help children and teachers. Sprint is also the official sponsor of the Alzheimer's Association Memory Walk and established the Sprint Foundation in 1989. The foundation makes direct grants to charitable organizations and matches gifts of employees and retirees. In 1997 alone, Sprint gave $6.1 million in grants for education, the arts, community improvement, and youth development. With Sprint's philosophy of fun and giving, it is no wonder that employees feel that they are a part of a very large family.

Sprint introduced Total Quality Management in 1989. Total Quality Management gives employees the power to do their jobs independently and empowers them to make decisions on their own. The advantage is that employees begin to work as a team as if the business was their own. Training in Total Quality Management includes interpersonal skills, time management, and conflict resolution. The forming of teams is also involved; employees, then, are not evaluated as individuals, but as a team.

SOURCES OF INFORMATION

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