NextWave reaping the results of heavy spending

NextWave is shedding as many businesses as it can to stay afloat after burning through some serious cash during the last year. Could this be the end of a company that has stood the test of time?

The company battled the FCC in the 1990s to keep its PCS licenses after filing for bankruptcy, ultimately winning the right to keep the licenses in the Supreme Court. It subsequently sold most of those licenses to commercial operators and operated in stealth mode as it developed its business model. It came back in the public eye in 2007 with a rather interesting business strategy, what it called its Wireless 2.0 vision.

NextWave was going to make spectrum available to companies that wanted to enter the mobile broadband space and use its products and technologies, including WiMAX and TD-CDMA. It acquired IPWireless, the maker of TD-CDMA, for $99.6 million and purchased a 65-percent controlling stake in WiMAX Telecom AG through its Inquam Broadband GmbH subsidiary. It was gaining momentum on WiMAX chipset front.

But the company also made some perplexing moves. In 2007, NextWave acquired a 69.23 percent stake in Japan's IPMobile from Mori Trust and had planned to deploy TD-CDMA equipment before the operator's network license expired. One month later, NextWave sold it back to Mori Trust, realizing its chances of making a profit in Japan were slim. 

Moreover, NextWave had a dazzling array of assets: a rather large swath of spectrum the 2.3 GHz, 2.5 GHz and Advanced Wireless System bands (1710-1755 MHz and 2110-2155 MHz). It sold the AWS spectrum to T-Mobile and others; beamforming intellectual property from its acquisition of WiFi vendor Go Networks and mobile video from its ownership of PacketVideo, to name a few. Then it spent heavily on developing both WiMAX and TD-CDMA. They were impressive assets, to say the least, but disparate and expensive. Throw in a weakened economy, and there is a recipe for disaster. 

So now the company has discontinued its networks business, which includes Go Networks, IPWireless and Cygnus subsidiaries, as well as its global services and NextWave Network product support strategic business units so it can meet its estimated working capital requirements at least through September 2009. The company has sought the services of Canaccord Adams to explore strategic transactions to preserve the value of its semiconductor business and eliminate the need for the company to make on-going capital investments in or incur liabilities relating to the business past the end of the first fiscal quarter of 2009.

NextWave was developing some pretty technologically advanced WiMAX silicon but the chances of the company's efforts ever seeing the light of day appears to be quite slim as the economy continues to sink.--Lynnette