Clearwire Forecast Fails to Impress
Clearwire’s (NASDAQ: CLWR) financial troubles have put it in the (hot seat) since reports began coming out in 2010 that its lack of profitability, along with its burn-through of cash, would topple the wholesale/retail provider of WiMAX-4G mobile services. However, its picture of the future continues to be confident as revenues continue to rise and customers increase by the quarter. That picture depicted by CEO Bill Morrow in a recent Earnings Call was very upbeat and positive on the outlook for Clearwire turning the corner into positive cash flow in 2012.
Specifics of which Morrow hinges his predictions are the continued high-growth metrics in subscribers within its foot-print, and the strong performance of its wholesale business as a reseller of mobile services for other providers like Sprint, Time Warner Cable, and Comcast. He also predicts Clearwire will continue its move to reduce expenses and sell existing spectrum to raise needed cash.
“In 2010, we achieved our aggressive network expansion goals, grew our subscriber base at an incredible rate and solidified our position as a leader in the 4G industry in both network reach and customer growth.” Bill Morrow (Clearwire Reports Record Fourth Quarter and Full Year 2010 Growth)
Despite the prediction that LTE will overtake Clearwire’s WiMAX within the next couple of years, it seems to be bullish on continued growth in its well-positioned foot-print to make a significant distinction in staying power. There are detractors who see many hurdles in the company’s ability to obtain financing, though offers have come in to purchase spectrum up for sale, which Clearwire is evaluating at the moment. Verizon and AT&T have both announced their on 4G services which will increase the competition for customers that Clearwire needs to continue building revenues to off-set losses.
A contentious relationship with Sprint, a 54% stakeholder, who is said to be negotiating with its distributor concerning their relationship, continues to be murky at best, including sales directions with Clearwire’s retail presence having been a stumbling block within the partnership. Analysts have not been bullish with the uncertainty and recent happenings in the Clearwire camp. Since late 2010 most have put the company’s stock on a (Hold) while its CEO scrambles to reduce expenses and raise cash.
There are clear and concentrated areas of focus for the CEO:
- Aggressively market its Wholesale Business to grow customers
- Reduce expenses by putting Retail Projects on hold or abandon all-together
- Repair its relationship with Sprint and move forward
- Sell existing spectrum to raise needed cash
- Preserve existing Capital
It is still unclear how the company will fair in the coming months as it forges a different path based on increased financial scrutiny, projections of continued triple-digit growth of its services, while balancing a contentious relationship with Sprint. The positive is strength in sales and the negatives continue to be a lack of financing and expense control. The Stock closed today at $4.90, down (7.37%).