Broadband Reports says Clearwire stock has taken a big hit:
Despite the initial excitement surrounding Clearwire’s IPO and WiMax, boundless optimism doesn’t pay the bills, and a research firm says the company may need to raise as much as $5.1 billion over the next five years to stay afloat. That news has helped contribute to a beat down on Clearwire stocks, which yesterday hit their lowest point since going public last month, slumping to about $16.63.
“The inability for Clearwire to get additional financing could cause the company to become financially distressed or risk bankruptcy,” stated Citigroup’s Michael Rollins.
Clearwire had “record subscriber growth” of more than 25 percent from its year-end 2006 customer levels. Clearwire said it ended 2006 with around 206,000 wireless broadband users and had about 258,000 users at the end of the first quarter of this year. Clearwire said that the net adds figure was an improvement of 41 percent year-over-year. Clearwire says customer churn during the first quarter was 1.6 percent.
The Seattle Times notes that an AP story says that Morgan Stanley, JPMorgan and Stifel Nicolaus analysts seem to agree that the company’s stock is a good long-term investment, even though Clearwire will likely lose money for years. Risks the company faces include:
- Clearwire is young and has a history of operating losses.
- The company will need to raise an additional $2.5 billion to $3 billion of financing prior to reaching a fully funded state.
According to Wireless Week, Clearwire also has licenses for 2.5 GHz spectrum covering 210 million people in the United States. Clearwire CEO Ben Wolff, says they have spectrum covering all or parts of 72 of the top 100 markets.
Chicago, Washington and Baltimore will get Sprint’s Mobile WiMAX network by the end of this year. Sprint expects the $3 billion project to reach more than 100 million Americans in 16 other cities by the end of 2008.
Sprint and Clearwire are going head-to-head in Michigan. Clearwire’s business rates for broadband wireless will range from $40 to $50 per month, with $30 to $40 for households.
