Dear Mr. Berko:

What do you think of Sprint now that Mr. Forsee is gone and Dan Hesse is running the company? What do you think Sprint's biggest problem was? What do you think about Mr. Hesse? And would you recommend the purchase of Sprint for a two-year time frame?

B.B., Des Moines

Dear B.B.:

Gary Forsee, the former chief executive officer, was an engineer and a darn good one, too. But he didn't know bupkis about managing people, and I think he thought communication is the Eucharistic rite in which the consecrated bread and wine is distributed among participants. Engineers are supposed to engineer, and few are qualified to run a business.

Sadly, the Sprint Nextel Corp. (S-$11.83) board of directors -- having no more sense than God gave a turnip -- allowed Forsee to reign too long before he was asked to resign. Engineers, like statisticians, accountants and coroners, live in a world that is black or white, right or wrong and stop or go; there's no in-between. Gary is a well-meaning guy, a little stuffy, has superb technical expertise but couldn't motivate a starving dog to eat red meat.

I don't know much about Dan Hesse except that this Notre Dame graduate has a master of science degree from Massachusetts Institute of Technology and a master of business administration from Cornell University. He's been in the communications business for 28 years, with 24 of those years at AT&T and was president and chief executive officer of AT&T Wireless Services Inc. I think Hesse has the moxie, the experience and the motivation to fix the damage at Sprint, stem subscriber losses and improve employee morale. And that's a good reason to own the stock.

Another good reason to own Sprint is that the stock trades at $11.83, which is nearly seven points below its book value of $18.70. Book value, as you know, is determined by totaling all Sprint's assets, adding up all the liabilities, subtracting the liabilities from the assets and what's left over is called book value. So at a disastrous fire sale you could theoretically buy all of Sprint for 69 cents on the dollar. Most telephone companies like AT&T and Verizon trade at three times book value, and Qwest Communications International Inc. (Q-$5.67), a badly managed AT&T spinoff (formerly US West), has a book value of 20 cents a share and trades at 30 times book.

A third reason to own S is that since Hesse took the helm, five brokerages upgraded their opinions on the company's stock, and I suspect others on the Street will follow suit. Hesse can cut costs without cutting quality or service, he's a people person, and his style ought to generate some esprit de corps. Forsee came from Bell South with very little wireless expertise; Hesse, a former CEO of AT&T Wireless (1997 to 2001), knows the ropes, talks the talk and walks the walk.

According to a Sprint executive, Forsee's purchase of Nextel was one of the board's many blunders and dumb decisions. Sprint and Nextel were as different as cheese and chalk, and the merger was a cultural shock to both companies. The fit was like trying to teach cats to swim underwater, and the resulting problems created a flood of troubles.

Recognizing these difficulties, some observers suggest that Hesse would be wise to spin off Nextel and demand that the insipid, vacuous board personally reimburse Sprint for losses that will occur. The Nextel purchase was so idiotic that Alexander Graham Bell would roll over in his grave.

This may be one of Hesse's biggest hurdles, but perhaps Hesse might be able to off-load Nextel to a telecom in Bangladesh, North Korea, Sikkim or Bulgaria, each of which wants to expand its wireless network.

Nextel aside, within the next 18 months I believe S could trade at the $18 to $20 level. And my friend Tylenol Jones, who likes to buy undervalued companies, is more sanguine than I. He thinks S could trade between $22 and $25 in the coming 18 months. He recently recommended Handleman Co. (HDL-$1.48) with a $12.45 book value, Cost Plus Inc. (CPWM-$3.76) with a $12.50 book value and Radio One Inc. (ROIAK-$2) with a $10.50 book value, and now he's recommending Sprint, too.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.© Copley News Service