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Clearwire faces financial hurdles ahead of buildout
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The new Clearwire Corp. may face serious financial hurdles as it pursues a nationwide buildout of mobile WiMAX, and may have to scale back its plans if financing is not as robust as envisioned.
Clearwire solidified its merger with Sprint's Xohm WiMAX business unit earlier this fall and has $3.2 billion in investments in place from the likes of Intel, Google, Comcast, Time Warner, Bright House Networks and Trilogy Equity Partners. The initial buildout will be in markets where Clearwire had offered services before the merger with Sprint, and then to other cities as well. Currently Baltimore is only the city offering mobile WiMAX, but Portland will follow in January and other cities, such as Atlanta, Boston and Chicago, are set to launch next year.
But the rollout will be expensive. If credit markets continue to be weak, Clearwire might either have to get more financing from its equity partners that helped launch the new Clearwire or scale back its plans.
"There is a scenario in which we'd build a little more slowly and you'd never need any more capital," Clearwire CEO Ben Wolff said in an interview with the Wall Street Journal. "Or we could be more aggressive and we'd have to look to acquire more debt or equity in either late 2009 or early 2010."
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Comments
Posted by Anonymous | December 18, 2008 - 1:31pm
OK, I know your just doing your job, but it'll be interesting to see how this rehash of old Clearwire news affects the stock price. Are you aware that the short sellers love to jump/pile onto a stock with any kind of negative press just to drive the price down? Are you holding a short CW position Phil? How about some encouragement for the underdog instead? Or some new news. Or technical news. I.e., is the upgrade to wimax going to solve the problem of poor reception during rainstorms? Thanks, KH
Posted by William da Wimp | December 18, 2008 - 2:27pm
Truth be told. Let me ask. Who wants to eat a half baked turkey? I’d rather eat short bread cakes. Now, don’t be mad, if you don’t like short bread cakes. But, an uncooked turkey is for a witches’ brew. Double, double, toil, and trouble; fire burn and cauldron bubble. Ah…I smell weakness in the air, and it smells good. Like chestnuts roasting on an open fire. Merry Christmas and good tidings to all. And, thank you Mr. Bard for your silver words.
Posted by Anonymous | December 26, 2008 - 10:01pm
Isn't it amazing, the ink isn't even dry on their big merger, and the CEO has already made several public anouncements that they don't have enought cash to build their network. I've seen many blog debates about this over the past several weeks. Some people were trying to warn about this, but others (probably those that work at the company) were trash talking the truth tellers.
Looks like the truth is out already; the big question in my mind is HOW FOOLISH do Google and Comcast look now? they were suckered into this ponzi scheme only to learn that the $3.2B was merely a downpayment on the network build that was promised to be fully funded and built by 2010 (hahaha). More important, it provided a means to feed the hungry aligator (the big negative nut from it's existing operation). Good luck to anybody who buys this stock for anything more than $.24 a share on a short-term momentum play. The 1/2 trained eye saw this coming a mile away. I predict they'll go bust within 18 months!
Posted by Anonymous | January 4, 2009 - 8:38pm
The rainstorm problem won't effect the Clearwire reception here in Atlanta.. due to the massive rainfall shortages :0)
Posted by Now U See It; Now U Don't | January 5, 2009 - 9:42am
The way you take a salami from someone is by taking it a slice at a time. Mr Chips, the cableguys, and Dr. Search please pay attention. Three card Monte anyone?
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