Clearwire: The Post IPO Good-Time Blues

Reporting what it calls “record first quarter 2007 results” — and it would be a record, since it’s the company’s 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, that’s 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 — that’s 2.5% of the potential customer base. And the revenue doesn’t 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. That’s in addition to the $1.5 billion it has on hand.

Clearwire’s 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 Motorola’s 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.

AOL is working with Clearwire. The two will jointly market wireless broadband in all of Clearwire’s service areas — last year, they trialed this in markets in Florida and California.

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 — that’s 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.