Sprint faces tough questions at annual meeting

NEW YORK (Reuters) - Sprint Nextel (S.N: Quote, Profile, Research) faced multiple questions about how it would turn the company around and stop customers from fleeing its cell phone service at its annual shareholder meeting, where voters only narrowly rejected one proposal that would have let them call special meetings.

While shareholders by a vast majority of votes approved Sprint's slate of nine board members on Tuesday, an unusually slim majority rejected a shareholder proposal to let shareholders call special meetings. About 54 percent of votes were cast against the proposal while 46 percent were in favour.

"That's very high. I think people are feeling very unhappy with where the share price has been," said Cowen & Co analyst Thomas Watts, who said shareholders may see the ability to call meetings as a way to help them take aim at directors or management instead of having to wait until the annual meeting.

Cowen noted that while current Chief Executive Dan Hesse has only been in his role a matter of months, they had not been happy with previous CEO Gary Forsee, who left in October amid steep customer losses.

Sprint shares, which have lost more than 60 percent of their value since the company bought Nextel Communications in 2005, were down 19 cents or 2.1 percent at $9.05 on the New York Stock Exchange late in the session.

The meeting was held a day after Sprint said its first-quarter net loss widened to $505 million (250 million pounds) from $211 million in the year-ago quarter, as it lost more than a million high-value customers who pay monthly bills and who commit to service contracts of one or two years.

Hesse faced tough questions about the results and the company's ability to compete with rivals during the meeting, which was webcast.

"Verizon and AT&T have been eating our lunch," in winning high-value customers, one attendee told him. "How did we get into this situation?" and how will Sprint resolve it, the person asked. Another asked why the company has performed so poorly since it bought Nextel Communications in 2005.

Hesse told shareholders that while Sprint was beginning to see improvements, turning performance around would "take time."