I just report the news...sorry if this is a repost. Looks like Nextel is gonna try a screw up Boost. CEO wanted to go nationwide but Nextel didn't.
IRVINE, Calif. (PRNewswire) - IRVINE, Calif., Nov. 24 /PRNewswire/ -- Peter Adderton, the driving force behind Nextel Communications' entry into the youth cell phone market, has left the company in a disagreement over strategy and direction and the failure of Nextel to keep promises made to him.
Adderton, 36, was founder and CEO of Boost Mobile LLC, the Australian-born company that sells Nextel service using calling plans, features and cell phones designed specifically for young consumers. Nextel purchased a majority stake in Boost from its Australian founders in August 2002 in what was widely seen as a bold initiative by the nation's fifth largest wireless company to branch out from its business base to penetrate a largely untapped consumer segment. Nextel bought the balance of Boost's equity earlier this year.
Adderton said he told Nextel CEO Timothy M. Donahue during a meeting Sunday he believes the company and several senior officers have failed to live up to promises made when Nextel completed its purchase of Boost this past August.
"When Nextel bought our company, it was made clear to me that Boost would continue to operate independently and that our job was to build a brand that could dominate the youth wireless market," Adderton said. "Instead, they're trying to turn us into Nextel in jeans. Every day, Nextel reins us in a little more and makes us increasingly corporate. That's completely incompatible with what we're trying to accomplish."
When the Nextel-Boost joint venture was announced, analysts praised it, with one saying "Boost Mobile has demonstrated an ability to understand what makes Generation Y tick." Nextel Executive Vice President and COO Tom Kelly said the company had selected Boost because "one of the key requirements for the market is that it has to truly be an accepted brand by youth, and on their terms." Kelly said Boost's management team had "unparalleled expertise in developing wireless offerings that are uniquely suited to the lifestyle and behaviors of young people."
"To build a youth-oriented brand, you have to be immersed in youth culture," Adderton said. "Since Nextel doesn't get that and doesn't want to operate that way, I just want to take Boost back and run it myself in the way I know will work."
Adderton said he believes Nextel's failure to roll out the Boost brand nationwide and decisions made by Nextel management to impose Nextel's corporate culture on Boost were taking the company in the wrong direction.
Adderton founded Boost Mobile in Australia and New Zealand in 1999, and it remains an independent company in those countries with him as CEO and major shareholder. The company has had success targeting young consumers through its association with surfing, skateboarding and extreme sports. Not only is Boost a major sponsor of those types of competitions, but its phones are sold in surf shops and other retailers, such as Sam Goody stores, with youth clienteles. Among its phone offerings is one with Quicksilver's Roxy brand. Another phone with the Quicksilver brand is scheduled for launch next year. In test markets in California and Nevada, Boost has signed up more than 250,000 subscribers, principally through pay-as-you-go plans that appeal to young consumers.
About Boost Mobile
Boost Mobile LLC is a lifestyle-based telecommunications company that focuses solely on developing and distributing communications products for the youth market. The company offers pay-as-you-go wireless phone and entertainment services available in California and Nevada, which are designed to meet the lifestyle needs of today's active youth.