Clearwire: The Post IPO Good-Time Blues
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Reporting what it calls record first quarter 2007 results -- and it would be a record, since its the companys first post-IPO public report -- Clearwire
of Kirkland, Washington said it had more cash flow positive markets, a customer growth record with 41% more new subscribers than in Q1 of 2006, and revenue of $29.3 million (three times what it had last year in Q1).
The problem is, thats only 10 cash-flow positive markets (up from 4 last year) out of 37 markets Clearwire has service in. 41% growth is good, but the company still only has 258,000 paying subscribers -- thats 2.5% of the potential customer base. And the revenue doesnt make up for a loss of $51.5 million after taxes -- compared to losing $33 million in Q1 06.
The company now has the potential to serve as many as 10 million customers in the U.S. and Europe, with over 1,300 WiMax or pre-WiMax equipped towers in service. It wants to reach 125 million paying customers in the next five years -- but that means spending a lot more. The Seattle Times says the company needs to spend $1.6 billion just to finish deployment. Thats in addition to the $1.5 billion it has on hand.
Clearwires goal is to become the dominant WiMax (or at least WiMax-class) provider. Its primary competition is the network being installed by Sprint Nextel
Clearwire got big bucks last year from Intel and Motorolas investment arms, to the tune of $1.26 billion. It raised another $600 million with its public offering in March, but had a rocky start. The stock is down about 25% from its opening.
Last week, Clearwire received Federal Communications Commission (FCC) approval for a laptop PC card it calls WiMax-class that it will start selling later this year. The card is made by Motorola, but is not 802.16e-based -- thats the IEEE standard WiMax is based upon. Instead, it only supports the proprietary Expedience network created by NextNet -- a company bought by Clearwire and then sold to Motorola at the same time that Moto Ventures provided a few million in funding. Clearwire has deployed Expedience technology in 13 states, according to Network Computing.