Sprint Shuffle Squeezes Intel

The biggest long-term impact of Gary Forsee's departure as CEO and chairman of Sprint Nextel Corp. could be on the company's huge WiMax wireless broadband initiative called Xohm.

Some financial and technology analysts believe that Xohm could be in trouble, although not immediately. A new CEO could spin off the business unit or scale it back, they said.

However, other analysts say that Sprint and its investors would be crazy not to capitalize on the huge investment the company already has in licensed 2.5 GHz spectrum to be used for the Xohm network.

Slated for a US$5 billion investment by Sprint in coming years, Xohm is supposed to provide 2Mbit/sec to 4 Mbit/sec in wireless broadband speeds to 100 million users, starting in a nationwide rollout next year, Forsee told analysts and the press in August.

Intel and Sprint share a similar vision of the future: The high-speed wireless network called WiMax. With Forsee now out of the picture, the era of WiMax, and Intel's plans to capitalize on it, have hit a speed bump.

According to some analysts, Sprint's plans to spend $5 billion to build a nationwide WiMax network in the next several years are now in question.

As valuable subscribers defect from Sprint and the company struggles to merge its operations with Nextel, the WiMax project hatched by Forsee looks like an expensive distraction. Sprint may well opt to pare the investment -- or possibly even pull the plug on the project entirely, reckons Pacific Crest Securities analyst Steve Clement.

That wouldn't be welcome news at Intel, which has tied a good deal of its product development to WiMax. Just last month at its developer conference, Intel executives outlined plans to integrate WiMax chips into a variety of devices, from laptop PCs to handheld gadgets.