Although Gary Forsee has stepped down from his posts as Sprint’s CEO, president and chairman, questions remain about what his successor must do to turn the company around.

Analysts say the company faces myriad problems, from continued difficulties in integrating former Nextel users into the Sprint network to subpar marketing campaigns to investor nervousness over the future of its $5 billion WiMAX investment to a shrinking subscriber base. In the quarter leading up to Forsee’s resignation, for instance, Sprint announced that it had lost 337,000 customers. And a recent report from UBS Investment showed that Sprint’s ARPU (average revenue per user) is falling at a rate of 5% per year, while AT&T and Verizon’s ARPU is growing at an annual clip of 3% to 4%. Sprint’s share price, meanwhile, has fallen by more than 20% since the company’s merger with Nextel in August 2005, and the company closed Wednesday trading at $18.02 per share.

But while the new Sprint CEO will face several challenges in any effort to turn the company around, some analysts believe Sprint is already close to regaining some of the market share that it’s lost since it merged with Nextel in 2005.

“Sprint arguably has an equal, if not better, handset selection than Verizon, yet Verizon still attracts a lot more subscribers than Sprint does,” says Michael Nelson, an analyst for the Stanford Group. “But people choose Verizon because it’s been drilled into their head that they have a terrific network. What needs to be fixed has a lot to do with overall marketing and positioning.”

Nelson says Sprint needs to give consumers a compelling reason to choose its service over others. For instance, he notes that T-Mobile has marketed itself as a value leader, while AT&T has latched itself onto the iPhone. Sprint’s strategy, he says, has been to market itself more toward business customers while neglecting possibilities within the consumer market.

“They should try to position themselves as a cool, hip, innovative wireless company that appeals to mass consumers,” he says. “There’s room in the market where … they can create some sort of marketing message where it’s cool to have a Sprint phone.”

Telecom analyst Jeff Kagan agrees that Sprint’s big problem has been its messaging and not its service, which he says compares favorably with that of other major carriers.

“It’s not a quality issue. It’s a perceived quality issue,” he says. “Sprint needs a CEO who’s focused on marketing. It’s a good quality service, and it’s got a lot of features, but they have not focused on telling customers about their high-quality services.”

But UBS analyst John Hodulik says that while Sprint’s messaging is indeed a concern, the company also has problems related to customer service that he says date all the way back to Sprint’s 2005 Nextel merger. While Sprint subscribers are on a CDMA network, roughly 15 million Nextel subscribers are still using the old Nextel iDen network, which means that Sprint can’t deliver 3G services to more than a third of its customer base. And in addition to being very expensive, running two different networks has made Sprint’s customer service operation less efficient, Hodulik says.

What about WiMAX?

One issue that’s potentially bigger than Sprint’s current woes with network integration and marketing, however, is its $5 billion investment in WiMAX, which Hodulik says is the company’s key to rebranding itself. If Sprint can successfully roll out its WiMAX services by the end of 2008, he says, then the company will have nearly a two-year head start over its competitors in delivering 4G wireless services. Although some Sprint investors have expressed concerns about WiMAX, which is still in its developmental stages, Hodulik says the company has come too far to drop its investment in the technology completely.