February 2, 2006

Division prepares to go it alone

Sprint unit picks name and logo

By Jason Gertzen

They traded in Spinco for Embarq.

The local telephone business of Sprint Nextel Corp., informally dubbed Spinco, announced Wednesday that it will take the official name Embarq Corp. when it spins off as a stand-alone company later this year.

Dan Hesse, chief executive of the Sprint local unit soon to be known as Embarq, disclosed the results of a 10-month branding process during a presentation in an auditorium on Sprint's Overland Park campus. He was wearing green, the colors of a new pointy logo resembling a stealth fighter jet.

"The company's new name, Embarq, and logo are meant to signal the way we will do business and establish what a next-generation local communications company can be," Hesse said in a statement. "This is a company that will be aggressive and innovative in the marketplace, and the new name and logo, with its distinctive and differentiating coloration, is the brand we want customers to remember."

After last year's merger with Nextel Communications Inc., Sprint is planning to spin off its local division so it can focus on wireless, a faster-growing segment of the telecommunications industry. The parent corporation mashed together Sprint Nextel Corp. as its brand and ditched the red diamond logo for a new yellow one as it entered the market as a merged company last fall.

Embarq's operation serves more than 7 million phone lines in 18 states, making it the fifth-largest local communications company in the country. It expects to have about $6 billion in annual sales.

The local unit employs about 14,500 workers, though its work force is expected to grow to about 20,000 after the spinoff. About 5,000 of those workers will be based in the Kansas City area.

Hesse, who came to Sprint after leading AT&T Wireless and a high-tech communications firm called Terabeam Corp., is positioning the new company to compete by offering a package of communications services that includes local phone service and high-speed Internet connections. The spinoff will also sell Sprint wireless service, but it is expected to be offered under the Embarq brand name.

Salt Branding, a San Francisco-based consultant, worked with Embarq to develop its brand strategy. The new name will be used in a limited way until the spinoff is completed, probably in the second quarter.

Another brand consultant with offices near Salt's said he was puzzled by the name.

"Em what?" said Steve Manning, managing director of Igor, after being told of the Embarq, with a "q," name. "I have no idea what they are doing. I have no idea."

Consciously misspelling the word "embark," is an odd decision, said Manning, who notes both the brilliant and the botched in the branding world on a blog at www.snarkhunting.com.

"It sounds like a naming consultant was involved, doesn't it?" Manning said.

Increasingly in recent years, companies are cobbling new words together as brand experts and employees serving on a name search committee seek a word without negative connotations and an available Internet address, Manning said.

A Sprint spokeswoman said the new name will be spelled with a "q" because company executives want a brand that is "visually and verbally distinctive."

Embarq emerged after the company examined thousands of potential brands and talked to well over 1,000 customers during research, said Daniel Alcazar, a Sprint vice president of brand management. Business and residential customers surveyed indicated that the new identity was "forward-looking, futuristic and innovative," and a good fit "for a new company charting its own course," the company said.

Although Sprint's local telephone division has roots going back a century, executives want the new name to focus on the company's future position in the communications industry, Alcazar said.

"'Telephone' would be too limiting for us," Alcazar said. "We purposely did not include that terminology."

Company executives did not want to sell Sprint wireless service under the brand of its current parent company because Embarq also will compete against Sprint in some niches of the telecommunications industry, Alcazar said.

"I'd essentially be endorsing my competitor," Alcazar said. "It can lead to customer confusion."

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