That's the great big question with the aim of investors and Clearwire's customers are asking as the company continues to look in place of more funding to support its net spreading out and deal with growing competition. Clothed in November, Clearwire thought it might not maintain an adequate amount cash to keep its net running through the internal of 2011. Since after that it's taken on more debt and complete a across-the-board pricing dispute with Sprint Nextel, which has held its short-term possibility.
On its basic quarter seminar call recently, executives in place of the company thought Clearwire has an adequate amount cash to deposit its net operations in place of the subsequently 12 months. But pardon? Will go on subsequently time as Clearwire tries to compete with growing competition from other carriers, such as Verizon Wireless, which has already launched its 4G net?
Clothed in an interview with CNET, Clearwire Chief Operating Officer Erik Prusch admitted with the aim of the company faces funding challenges, but he thought he's still bullish on the company's opportunity as it sees a colossal opportunity to fuel Americans' need in place of more wireless data services.
"Our subscriber statistics are growing quickly and the handling stats reveal us with the aim of near is a plea and demand in place of more scope," he thought. "So we feel we are well positioned to join folks needs. We maintain more spectrum assets than everybody to boot. And we can import more scope than some other carrier."
He went on to say with the aim of the strategy on the subsequently time and outside is constantly evolving. But he thought the game diagram as of in a jiffy is to unearth more investment and to increase in intensity revenue to support the needs of the net. Ultimately, he believes with the aim of Clearwire will be a profitable organization.
"We resolve need other funding to pick up again to broaden our net," he thought. "And we're bullish not far off from being able to secure with the aim of funding either in by relying on our strategic investors or through another investors. We besides think we can grow revenue organically by growing our revenue and suitable profitable."
Uphill battle
At this central theme Clearwire still has a long way to function. Clothed in the basic quarter of 2010, Clearwire reported a loss of $226.96 million, or 93 cents a share, on revenue of $242 million. This was despite the verity with the aim of Clearwire added 1.8 million subscribers. The company thought it's on track to last part the time with 9.5 million customers. It ended 2010 with not far off from 4 million subscribers.
Despite the verity with the aim of the company is accumulation customers and is increasing revenue, it's burning through a fate of cash to resolve it. While of protest 31, Clearwire had $1.2 billion in cash, which was down from $1.74 billion by the side of the last part of December.
The company has begun to dramatically bring to an end expenditure. Clothed in the basic quarter of 2011 it spent not far off from $472 million, down from $1.2 billion in the fourth quarter of 2010, according to Stifel Nicolaus analyst Christopher queen.
While part of its diagram to reduce overheads, the company announced earlier this week with the aim of it campaign to outsource the management and maintenance of its net to equipment supplier Ericsson. It's besides scaling back its retail labors. It already canceled campaign in place of selected of its own consumer-oriented retail products, such as WiMax handsets. And it canned its prepaid WiMax service offering similar to solitary a a small number of months on the marketplace.
Instead, Clearwire is focusing its energy on on the increase its across-the-board organization, which at the moment consists mostly of Sprint Nextel customers.
"We are actively pacing our retail organization," Prusch thought. "If we had $4 billion in cash we would be going away full-bore. But we don't. We maintain a billion and alteration. So we're holding back in provisions of retail to locate the cash to wear out in investing and humanizing relationships with across-the-board customers."
While in place of pardon? With the aim of channel in place of consumers in provisions of artifact offerings, Prusch admitted with the aim of selected products will be discontinued, "because they don't destroy the sweet recognize." But he thought the company still has a robust artifact line with the aim of its 1.6 million retail customers be thankful for.
Prusch besides thought with the aim of the retail organization is of great consequence to Clearwire even though it overheads the company a fate of money for the reason that by the side of this central theme, Clearwire is generating the bulk of its revenue from the retail customers. At the last part of the basic quarter, Clearwire had 6.1 million customers. Only not far off from 20 percent of them were retail customers. But even though these retail customers solitary be a symbol of a small quantity of Cleawire's overall subscriber center, they still generate almost 75 percent of the company's revenue. Clothed in the basic quarter, Clearwire reported calculate revenue of $242 million. Clearwire's retail organization made up not far off from $181.1 million of with the aim of calculate.
Wholesale to the rescue?
That thought, Prusch thought he expects the across-the-board organization to grow and increasingly tally in place of more of Clearwire's calculate revenue. But with the aim of brings to light an extra challenge with the aim of Clearwire faces. Most of its across-the-board customers approach from Sprint Nextel, which owns a 54 percent stake in Clearwire and has chipped in billions of dollars in funding to keep the company floating.
While Clearwire has comparable resale relationships with its cable investors, Comcast and Time Warner Cable, the bulk of virtually 5 million across-the-board customers approach from Sprint.
Meanwhile, Clearwire's other two major investors, Intel and Google, don't seem as bullish on Clearwire's prospects. Google didn't kick in more cash throughout Clearwire's carry on funding in circles. And carry on week, Intel thought it campaign to retail 10 million shares of routine in the company. The selling is projected to be not far off from 10 percent of Intel's stake in Clearwire.
Intel released a statement claiming with the aim of the selling is part of a diagram to rebalance its justness portfolio. Intel sold inedible shares in the company in 2009 as well. But Intel's move hurt the company's share charge and the Clearwire routine tumbled carry on week as investors viewed Intel's selling as a sign of waning enthusiasm in place of the company's prospects.
Prusch thought he doesn't believe with the aim of Google's and Intel's lack of investment or other topical moves are a sign with the aim of the companies maintain lost confidence in Clearwire's organization. He thought he hopes with the aim of they will pick up again to invest in opportunity rounds. He besides famous with the aim of near maintain been improvements in provisions of participation from Comcast and Time Warner on the across-the-board piece.
Dependency issues
Still, Craig Moffett, an equities analyst with the wall up Street safe Sanford Bernstein, who covers Sprint, has thought with the aim of the interdependency with the aim of Sprint and Clearwire maintain leading both other is unsustainable. He recently wrote in a explore observe with the aim of "Clearwire is broadly an feeler of Sprint, and adjusting pardon? Are basically intra-company payments sandwiched between a father and its subsidiary are not an adequate amount to drive material changes to the organization."
He went on to say with the aim of "shuffling paper sandwiched between entities through move pricing or civil liberties of handling or net sharing agreements does nothing to boost the revenue entering the Sprint/Clearwire ecosystem, and little to alteration the underlying consolidated cost make up. What matters is: Who is going away to wage in place of Sprint's (and Clearwire's) impending net expansions, and pardon? Revenue exists to support it?"
While Clearwire struggles to approach up with money to pick up again building its net and growing its organization, the company will soon look stiff competition from the nation's chief wireless providers: AT&T and Verizon Wireless. Verizon launched its 4G net last-minute carry on time using a knowledge called LTE. And AT&T is collection to launch its 4G net this summer. AT&T is besides in the process of trade T-Mobile USA in place of $39 billion, in a deal with the aim of will kind it the chief wireless carrier in the U.S.
The acquisition and another networks are putting pressure on Sprint, which may well kind the wireless company the smallest of the nationwide major wireless carriers.
Prusch admitted with the aim of Clearwire is dependent on Sprint and with the aim of Sprint is dependent on Clearwire. But he thought near is sufficiently of marketplace opportunity even with the stocky competition from Verizon Wireless and AT&T. He besides thought he isn't anxious not far off from the upstart LightSquared, which is using repurposed satellite spectrum to build a national 4G across-the-board net using LTE knowledge.
"If we can provide a better quality service by the side of senior download speeds and offer more bandwidth by the side of a better quantity, after that I think our long-term opportunities are very high-quality," he thought. "There is sufficiently of money to be made in this marketplace in place of Sprint and Clearwire."
But near are selected naysayers in the industry who believe with the aim of Clearwire's organization classic is flawed. John Stankey, the head of AT&T's enterprise organization, thought this week by the side of Reuters Global Technology Summit with the aim of wholesalers, such as Clearwire, can't kind it on their own and ought to be gobbled up by other players.
"There really isn't a profitable across-the-board classic in wireless at the moment," a Reuters story quoted him as aphorism. "Do you know single that's making money? Do you know single that's on a track to kind money? Do you know of single that's not in jeopardy of running barred of money in the subsequently 12 months?"
He went on to say: "If there's such a credible (wholesale) organization classic, is near not wealth with the aim of ought to be attracted to it?"
Meet Clearwire's baby daddy: Sprint Nextel
Sprint would be the nearly everyone likely candidate to good buy Clearwire, but Sprint's investors would likely not be able to stomach such a deal. The company is already expenditure billions of dollars to upgrade its net as it uses spectrum and wealth from its 2005 unification with Nextel.
"Sprint doesn't really hunger to own Clearwire," thought Roger Entner, break down of Recon Analytics. "In verity, they've used up to lofty lengths not to own them. They'd considerably maintain with the aim of net and its finances on someone else's books."
Even if Sprint doesn't good buy Clearwire, the company's are so dependent on both other, Sprint will likely pick up again to invest in Clearwire. And near is a very high-quality ability with the aim of the companies' will share net assets.
Prusch thought Clearwire recognizes with the aim of it is crucial in place of the carrier to maintain a national net with the aim of covers as much of the U.S. Population as it can. But building with the aim of net is expensive. So the company is in talks with Sprint not far off from sharing net assets as part of Sprint's another net spreading out.
He besides thought with the aim of Clearwire will eventually move away from its WiMax knowledge and move en route for a net with the aim of uses LTE. But he thought campaign are not definite and near is rebuff timeline in place of such a switch.
"WiMax to engagement has been a very high-quality knowledge high-quality in place of us," he thought. "We were able to take improvement of the haste to marketplace by LTE was even a reflect in anyone's eye. But we recognize the ecosystem in the U.S. Will be bigger in place of LTE than WiMax, so we are conscious of with the aim of."
He thought LTE knowledge and the ecosystem needs to mature by Clearwire can consider switching.
"We are knowledge agnostic," Prusch thought. "We don't believe with the aim of customers good buy a knowledge. They good buy fast and trustworthy access to a data net."
But will the network-sharing deal and Sprint's cash be an adequate amount?
Sprint will likely look its own cash pour issues as it upgrades its net. Moffett points barred with the aim of Sprint has not far off from $6.2 billion of debt maturities sandwiched between in a jiffy and the last part of 2013. And Clearwire's net may well require as much as $6 billion in wealth expenditure to complete the construction of the net.
If Sprint can't end the bill, who will? That is indeed the great big question yet to be answered.