«investing.businessweek.com»’s coming-out party was anything but festive.

Two months into his new job as chief executive of the troubled wireless operator Sprint Nextel («www.businessweek.com»), Hesse oversaw his first quarterly earnings report and analyst call. His message was as blunt and depressing as a Sylvia Plath poem: A turnaround of the No. 3 U.S. wireless operator is not going to happen any time soon. “I now have had two full months at the helm, and to be perfectly frank, the issues we face are more difficult than what I had expected to find,” Hesse said on a Feb. 28 conference call following yet another dismal quarter. “This turnaround will not happen for many quarters.” Sprint shares fell more than 10%, to close at 8.03, a new 52-week low. The last time Sprint touched $8 was in February, 1989.

There was so much bad news it’s hard to know where to begin. Customers, fed up with horrible customer service, continue to flee Sprint in droves. The company confirmed a staggering $29.7 billion writedown, wiping out nearly all of the value of its $35 billion merger with Nextel Communications. And dividend payments were suspended “for the foreseeable future.” Ratings Downgraded on Bad News

But that’s not all. Among premium subscribers, churn—a key metric measuring the percentage of customers who leave the company—was flat at 2.3%, despite intense efforts by Sprint to reduce the figure. Interim Chief Financial Officer «investing.businessweek.com» said the company expects churn to increase 0.2% to 0.3% in the first quarter “due to competitive pressures” and rising defections among lower-credit customers. Customers that are staying with Sprint are spending less money, with the average revenue per customer declining 4% over the year-ago quarter. And, to top it all off, Sprint announced it has borrowed $2.5 billion from its revolving credit facility to help pay off $2.25 billion in bonds that will mature in 2008 and 2009.

“This was an opportunity for Hesse to throw out everything including the kitchen sink and he did,” says James Moorman, an analyst with Standard & Poor’s. “Rebuilding your image does not happen overnight. It will be tough for a while.”

Fitch Ratings promptly cut its rating on Sprint Nextel to junk status and warned that it may cut the rating again since 2008 results will be significantly worse than expected. S&P said it may cut Sprint’s ratings to junk. “The erosion in Sprint Nextel’s subscriber base and the resultant decline in EBITDA are substantially higher than we anticipated and the company’s business profile is probably no longer supportive of an investment-grade rating,” S&P credit analyst Allyn Arden said in a Feb. 28 statement. Reviving Customer Service

The core challenge for Hesse will be to repair Sprint’s damaged reputation and convince customers to give the company another chance. In the fourth quarter of 2007, Sprint reported a loss of 683,000 premium subscribers who sign up for long-term contracts. In that same quarter Verizon added 2 million customers, including 1.6 million post-paid subscriptions, and AT&T added 2.7 million customers, including 1.2 million post-paid subscriptions. The customer service problems are so pervasive that Hesse said the company expects to lose another 1.2 million premium subscribers in the first quarter of 2008, and that the outlook was unlikely to improve in the second quarter.

To slow customer defections, Sprint announced a new service plan for $99.99 a month that offers unlimited calling and data plans, including unlimited text, video, and picture messaging. Rivals Verizon Wireless (a partnership between Verizon Communications («www.businessweek.com») and Vodafone (

LONDON: Prime Minister Gordon Brown of Britain and President Nicolas Sarkozy of France will urge banks this week to make “full and immediate disclosure” of write-offs resulting from the global credit crisis, Browns office said Monday.

The two leaders are increasingly concerned that confidence in financial markets is being hit by uncertainty over the scale of bad debts on banks books, which some estimates put as high as $600 billion, Browns office said in a statement.

Sarkozy is to hold talks with Brown on Thursday during a two-day visit to Britain as a guest of Queen Elizabeth II.

The two men will “call for greater transparency in financial markets and, as a first step, full and immediate disclosure of the scale of write-offs by banks,” Browns office said.

The bank crisis, especially the collapse of the Wall Street firm Bear Stearns, has shown “the scale of the problem and the effect on market stability of difficult-to-value assets and of undisclosed losses becoming known in a piecemeal fashion,” it said.

Mortgage-backed securities have plunged in value in a credit squeeze brought by low-quality mortgages in the United States, leading to a vicious circle of forced sales, falling prices and weakening balance sheets for banks.

Banks have written down more than $125 billion in assets since November, hammering their shares.

So far, action by central banks and governments has failed to halt the market turmoil.

Sarkozys visit is seen by the British news media as part of his drive for a close partnership with Brown.

The two leaders will call for more talks with the United States and other countries on “measures to promote financial stability” in forums like the Group of 7 industrialized countries, the International Monetary Fund and World Bank, Browns office said.

Brown, Sarkozy and the leaders of Germany and Italy met in London in January to discuss the financial crisis.

The highest profile victim of the crisis in Britain has been Northern Rock, a mortgage lender that Browns government ended up nationalizing.

The financial turmoil has damaged Browns reputation for economic competence and helped the Conservatives extend their lead in the opinion polls over Browns Labour Party.

Sarkozy and Brown will repeat calls for credit rating agencies to be more transparent and for international financial institutions to provide early warning of financial risks to the global economy.

The two men will call for changing the United Nations Security Council to make it more representative, including permanent representation for Africa, Browns office said. Britain and France are among the five permanent members of the council.

Brown will talk to Sarkozy about a possible French contribution to a civilian force consisting of police officers, judges and administrators that Britain plans to set up to help countries get back on their feet after conflicts, Browns office said.

Stock markets soared Monday on Wall Street after a higher offer seemed to salvage a bailout of the investment bank Bear Stearns and investors received a lift from an unlikely source: the housing market, which snapped a six-month streak of declining sales.

The Dow Jones industrials gained more than 240 points Д its second consecutive triple-digit advance Д as investors cheered both developments, which offered band-aids to two of the economys most beaten-up sectors.

Shares of big builders like Lennar and D.H. Horton rose and financial services firms gained, sending the broad Standard Poors 500-stock index up more than 2 percent. The tech-heavy Nasdaq composite index rose 3.3 percent.

Treasury yields rose as investors moved out of ultra-safe government bonds, a sign that some confidence may have re-entered the financial markets. Agricultural commodities surged, with wheat gaining more than 4 percent, after falling last week. The price of crude oil dipped slightly to $101.60, and the dollar gained against the euro.

But the resurgence may be short-lived: the Dow has swung more than 2 percent for four consecutive trading sessions, an enormous amount of volatility.

Indeed, each of the days developments came with a caveat. The $10-a-share deal for Bear Stearns, which has the support of the Federal Reserve, will allow JPMorgan Chase to take over the beleaguered investment bank despite a shareholder revolt that threatened to run the deal off the rails. Bear Stearns stock skyrocketed to $12.44 a share, and JPMorgan shares rose 3 percent.

The deal was received last week as a sign the Fed was finally finding a way to restore confidence in the credit markets. But the fact that a major investment bank effectively failed underscored anxieties on Wall Street that the current financial crisis may be one of the worst in decades.

On the housing front, sales of previously owned homes unexpectedly rose in February, ending a six-month losing streak and offering some relief to owners who had watched sales fall to record lows in recent months.

But home prices continued to plunge Д in February, they had their worst year-over-year drop since records began Д and economists warned that the 2.9 percent sales increase may not signal an end to the housing slump.

Existing-home sales, which make up most of the American housing market, advanced to a seasonally adjusted 5.03 million annual rate, up from 4.89 million in January, according to the National Association of Realtors, a trade group.

But the median price of a previously owned home declined in February to $195,900, an 8.2 percent drop from the period a year earlier.

Inventories, which ballooned in the last year, fell back slightly in February, with the backlog of unsold homes declining 3 percent to 4.03 million units, a 9.6-month supply at the current sales rate. The supply of single-family homes fell but the backlog of condominiums and co-op apartments rose.

“Inventories are very high relative to sales rates, and would probably be even more so if all those wishing to sell their home actually had the house on the market,” wrote Joshua Shapiro, chief United States economist at MFR, a New York research firm. “While price declines seen so far represent a reasonable start, we still have a long way to go.”

In another positive development for the housing industry, a major government-backed mortgage lender received permission to purchase $150 billion in mortgage-backed bonds guaranteed by Fannie Mae and Freddie Mac, a move that may make it easier for Americans to take out home loans.

The decision came a week after Fannie and Freddie announced that their own regulator had freed up an additional $200 billion for the same purpose.