Analysts speculate that Clearwire's (NASDAQ:CLWR) decision to discontinue its direct retail strategy may prompt Sprint Nextel (NYSE:S) to invest more money into the mobile WiMAX network provider.
In a Bloomberg report, Credit Suisse Holdings USA analyst Jonathan Chaplin said Clearwire unnecessarily drained its short cash supplies by maintaining its retail stores and promoting its own brand. He added that he believes eliminating the retail stores might persuade Sprint to contribute more funds to its partner.
During Sprint's earnings call with investors, CEO Dan Hesse said Sprint is still holding what he described as "very good discussion and negotiations" with Clearwire with respect to funding and strategy. Sprint holds a 54 percent stake in Clearwire, which is searching for either a new equity partner or a buyer for its excess spectrum in order to fund its operations. Hesse said the companies have not yet made any funding decisions. "If they need more, that will be a bridge they cross at that time," he said.
Although Clearwire hasn't officially confirmed that it is moving away from retail, it isn't a big surprise. The company suspended its retail operations in Miami and Denver when it launched those two markets late last year. Bloomberg yesterday cited unnamed sources as saying that the company will no longer invest in its retail strategy and instead focus on building out its network. The report also said that Clearwire will continue operating its 140 existing retail stores for the time being.
Clearwire wholesales services to its majority owner Sprint Nextel and cable partners Time Warner and Comcast.
- see this Bloomberg article
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