By Michal Lev-Ram

Sprint chief executive Dan Hesse faced investors for the first time Thursday as the company delivered a slew of bad news, including a fourth-quarter loss of $29.5 billion and a continued decline in subscriber numbers.

Hesse, a wireless veteran, was brought in last December to replace ousted CEO Gary Forsee. Since then he has made several cost-cutting changes at the company — including laying off about 4,000 employees and closing 125 retail locations.

But Hesse is first to admit that fixing Sprint’s (S) woes will take much more. And the thing that needs fixing most is the Sprint’s reputation for dreadful customer service.

“The number one priority is improving customer service across all touch points, including retail stores, billing and customer care calls,” Hesse told Fortune.

That may be an understatement. In customer care surveys, Sprint regularly ranks lowest. It came in behind rivals Verizon Wireless (VZ), AT&T (T), T-Mobile and Alltel on a recent customer service performance study by J.D. Power and Associates. Bad customer relations has contributed to its high level of “churn,” the rate at which customers defect to other carriers. Sprint says it lost nearly 700,000 subscribers in the fourth quarter alone.

“Not only are we not attracting enough new customers, but our existing customers are leaving us at too big a rate — that’s why the customer service issue is highest on our list,” Hesse said Thursday after a conference call with analysts.

To that end, Hesse says he has changed the way the company measures its call centers’ performance. Instead of focusing on “handle time” — how quickly a customer’s issue is resolved — he says the focus is now on finding the right solution the first time a customer calls in, even if that means the call takes longer.

“Call resolution,” said Hesse, “is becoming the number one performance metric.”

Hesse is taking other measures to try to stop customers from fleeing. Earlier that day he announced the launch of Sprint’s new $100-a-month unlimited calling and data plan. The other major carriers launched their own unlimited calling plans last week, but unlike Sprint theirs did not include services like “all-you-can-eat” mobile TV, Web browsing and e-mail.

Hesse says his number two priority is re-defining Sprint’s brand, which he hopes to build around the company’s data services and the high-speed broadband network that enables them.

But some in the industry are calling for even more dramatic bigger changes, such as breaking up the company and selling off its pricey WiMax project, a next-generation wireless network into which the company has poured billions of dollars.

Hesse said he is still evaluating all aspects of the company’s operations, but that any turnaround is unlikely to happen for many quarters.

By Michael V. Copeland

I was having lunch with Flixster CEO Joe Greenstein the other day when we came to the topic of how to monetize all these widgets that are cropping up like poppies in a Silicon Valley spring.

Flixster, for those of you who are not Web geeks or film-buffs, is an online community of more than 1 million people focused on movie recommendations and reviews. While it has its own Flixster.com site, where it has really grown over the last six months is as a Facebook application — so much so, that Barry Diller’s InterActive Corp. (IAC) was rumored to be interested in buying Flixster in a deal estimated to be worth $150 million.

Greenstein spends his waking hours thinking about ways not just to grow that user base, but also how to make money from it, and he’s got a novel idea.

One way his service — and vast numbers of other widgets out there — could monetize more easily, Greenstein says, is if there were a button embedded on a site to make small purchases. “If you want to charge for a virtual teddy bear, there’s the button, you charge 99 cents for it, and that’s it,” Greenstein says. “PayPal is too cumbersome for something like this, it needs to be really simple.”

If that 99-cent button did exist, all those Facebook and MySpace applications that now depend on online advertising would suddenly have another way of making money: by charging small amounts for small items.

Those items might be virtual goods — a digital photo of a favorite band, a simple game. The point is that it could enable an economy that has been mostly missing from the widget world. If you think charging 99 cents doesn’t add up to much, remember that the ringtone business grew to a multibillion dollar industry worldwide by charging similar amounts.

So who is best suited to introduce a simple, secure 99-cent button?

In many ways Facebook is the logical choice, and one of the worst-kept secrets in the Valley is that Mark Zuckerberg and crew are working on a Facebook “wallet.” It makes perfect sense that a next step for the Facebook platform would be to introduce a simple, universal payment scheme. Facebook has already collected credit card information on some portion of its users, so it wouldn’t take much to turn something like the 99-cent button on.

I’ll bet almost a buck on Facebook doing it, and soon. The larger question is whether Facebook’s wallet becomes the standard for the rest of the Web, or if some other, more enterprising gang swoops in with a better version of PayPal for the widget world.

What are you waiting for? Get on it.

By Michal Lev-Ram

Sprint announced early Thursday that it would offer an unlimited voice and data plan, one week after rivals Verizon Wireless, AT&T and T-Mobile launched plans that let users make as many calls as they want for $100.

Dubbed “Simply Everything,” Sprint’s (S) new service will also cost $100 a month, but unlike its competitors’ plans, the third-largest carrier is offering unlimited data services in addition to unlimited calls. Analysts had speculated that Sprint would try to compete with other carriers by offering a lower-priced plan for about $60. Instead, the company is offering more features for the same rate.

“This is not so much about price, it’s about differentiating our company,” Sprint chief executive officer Dan Hesse said Thursday morning during a conference call with analysts. “We’ve let our business get too complex, and we’re trying to make it simpler.”

In addition to unlimited nationwide calling, Sprint’s new plan will give users unlimited access to data services like text messaging, e-mail and Web surfing in addition to the company’s mobile TV, music and navigation services. It will be available on all the company’s networks — both CDMA and iDEN — starting Friday.

Verizon was the first to announce its service last week, but AT&T and T-Mobile followed just hours later. T-Mobile’s unlimited plan includes “all-you-can-eat” text and picture messaging, while AT&T (T) and Verizon (VZ) are offering unlimited domestic calls only. The unlimited plans were a first among major carriers, as wireless consumers typically pick rate plans based on how many minutes they think they’ll use per month and are stuck with paying steep fees (as much as 45 cents per minute) if they go over their allotted airtime.

Sprint, which posted a fourth-quarter loss of $29.5 billion Thursday, says it is hoping its new voice and data plan will help differentiate the company.

But even CEO Hesse admitted that “Simply Everything” won’t be enough to turn things around. Sprint faces significant challenges, including integrating Nextel’s network and repairing its poor customer service image. What’s more, it is bleeding customers — the company reported that it lost 683,000 subscribers in the fourth quarter.

“Our business is not performing well right now because we have not provided the right customer experience,” Hesse said Thursday. According to the CEO, a turnaround will not happen “for many quarters.”

By Yi-Wyn Yen

It appears you can blame Microsoft if Yahoo’s employees start slacking off and business partners flee.

Late Wednesday afternoon, Yahoo (YHOO) submitted a Securities and Exchange report that called Microsoft’s attempt to buy the company a “significant distraction for our management and employees.”

Yahoo says the chaos surrounding the unsolicited bid could result in its losing key advertisers, publishers, clients and talent. It also noted that as a result of the bid it’s  facing seven costly lawsuits from shareholders who want the deal to go through.

Two weeks ago, Yahoo’s ten-member board of directors rejected Microsoft’s nearly $45 billion offer, saying it was too low.

That hasn’t stopped Microsoft (MSFT), with its very deep pockets, from trying to arm twist Yahoo into a deal. Last week Wall Street learned that the software giant was preparing a bitter proxy fight to try to oust Yahoo’s board. Hours later, Yahoo began erecting a defense, notifying the SEC that it would offer its full-time employees enhanced severance packages if a change in ownership resulted in layoffs.

Yahoo’s latest signal flare to the SEC was tacked on at the end of a 10K filing under the section, Risk Factors. Here’s the report:

On February 11, 2008, our Board of Directors announced that, after carefully reviewing the proposal, it unanimously concluded that the proposal is not in the best interests of Yahoo! and its stockholders. The Board further indicated that it is continually evaluating all of the Company’s strategic options. The review and consideration of the Microsoft proposal (and any alternate proposals that may be made by other parties) have been, and may continue to be, a significant distraction for our management and employees and have required, and may continue to require, the expenditure of significant time and resources by us. Microsoft’s unsolicited acquisition proposal has also created uncertainty for our employees and this uncertainty may adversely affect our ability to retain key employees and to hire new talent. Microsoft’s unsolicited acquisition proposal may also create uncertainty for current and potential publishers, advertisers and other business partners, which may cause them to terminate, or not to renew or enter into, arrangements with us. Additionally, we and members of our Board of Directors have been named in seven purported stockholder class action complaints relating to the Microsoft proposal as more fully described in Part I, Item 3 “Legal Proceedings” of this Annual Report on Form 10-K. These lawsuits or any future lawsuits may become time consuming and expensive. These consequences, alone or in combination, may harm our business.