New Sprint CEO Dan Hesse’s former company, Embarq, is the latest to abandon its reseller deal with Sprint. Embarq’s chief financial officer told an analyst conference Wednesday that its wireless operations failed to meet the company’s expectations, attracting only 112,000 customers in two years, forcing Embarq to stop sales and likely shut down the operation next year.

“It was becoming apparent we wouldn’t obtain enough wireless customers to make a big difference,” CFO Gene Betts said. “Originally we hoped to get around a million customers, and it’s becoming clear we’re not to come close to that.”

When Embarq spun off from Sprint in 2006, it signed the mobile virtual network operator (MVNO) deal with its former parent, allowing it to market its own service plans under the Embarq name though using the Sprint network and devices. While sunsetting the service, Embarq isn’t shutting it off entirely. Betts said it would continue to sell its remaining inventory of phones to customers, but once they are gone, stop sales entirely. Existing customers are still profitable, so they will remain under the Embarq umbrella at least until 2009, when the company will weigh whether transferring them back over to Sprint.

Unlike Qwest, which announced that it dropped Sprint last week, Embarq is not picking up another carrier partner. Qwest signed an agreement with Verizon Wireless, not to market its CDMA service under Qwest’s brand, but rather to sell Verizon service’s directly as part of its quadruple-play bundle, just as Qwest sells DirecTV satellite TV service. Betts said Embarq wouldn’t rule out a similar deal, but it isn’t something it is currently pursuing.

“We’re objective and would consider anything, but we would have do a lot of thinking and analysis,” Betts said. For the time being, Betts added, Embarq wants to focus on the triple play, reselling Dish Network’s satellite TV service along with broadband and voice services, rather than distracting its customers with wireless.

Embarq won’t abandon wireless entirely, Betts said. Instead of selling phones and plans, though, Embarq wants to use fixed mobile convergence technologies to link its wireline services to any wireless carrier’s. Specifically he named find-me-follow-me services as a way of accomplishing that.

For Sprint, the loss of Embarq won’t have any immediate impact—at least not the impact Qwest’s departure will have. Qwest plans to transfer 800,000 wireless customers to Verizon network within the next year, which will eat into Sprint’s wholesale numbers. Embarq will maintain its current customer base and when it chooses to shut the MVNO down entirely will likely shift them over to Sprint, where they will become higher revenue retail customers.

The overall outlook for Sprint’s MVNOs, however, looks perilous. It’s most successful MVNO, Virgin Mobile--which Sprint has an ownership stake in--has projected slower growth for the year, and is currently in discussions with SK Telecom over a potential deal to combine Virgin Mobile USA with SK’s much smaller MVNO Helio. Virgin focuses entirely on prepaid customers mainly in the younger demographics. Helio also focuses on youth but at a more sophisticated tech-savvy crowd that signs up for data-heavy post-paid plans.