Friday, February 11, 2011

Clearwire Corporation (NASDAQ: CLWR): Q4 Earnings Preview 2010

Clearwire Corporation (NASDAQ: CLWR) is scheduled to release its fourth-quarter earnings after the closing bell on Thursday, February 17, 2011. Analysts, on average, expect the company to post a loss of 55 cents per share on revenue of $194.70 million. In the year ago period, the company posted a loss of 55 cents per share on revenue of $79.92 million.

Clearwire Corporation, through its operating subsidiaries, is a leading provider of wireless broadband services. Clearwire's 4G network currently provides coverage in areas of the U.S. where more than 110 million people live. Clearwire's open all-IP network, combined with significant spectrum holdings, provides an unprecedented combination of speed and mobility to deliver next generation broadband access. The company markets its 4G service through its own brand called CLEAR® as well as through its wholesale relationships with Sprint, Comcast and Time Warner Cable. Strategic investors include Intel Capital, Comcast, Sprint, Google, Time Warner Cable, and Bright House Networks.

In the preceding third quarter, the Kirkland, Washington-based company's loss was $139.42 million or $0.58 per share, compared to a loss of $82.43 million or $0.43 per share in the prior-year quarter. Revenue climbed 114% to $146.96 million from $68.81 million. Analysts, on average, expected the company to report earnings of $0.61 per share on revenue of $157.94 million.

At its last earnings call in November,the company doubled its total projected subscriber growth forecast for the full-year 2010 to about four million. The company also raised its guidance for average retail ARPU to $42 from the prior forecast for being above $41.00 for the full year. Retail CPGA is now expected to be in the mid $400's for the full year, an improvement from the low $500's projected earlier. The company also said it projects cash spending to be about $3.2 billion to $3.4 billion in fiscal 2010. The company said that it is looking to reduce contractor workforce substantially, and a 15% reduction in the number of employees. These initiatives could result in potential cost savings of between $100 million to $200 million in 2010 and again in the first half of 2011.

In November, Clearwire said it may run out of cash as early as mid-2011. The company got a lifeline in early December, when it sold $1.325 billion of bonds and exchangeable notes in a three-part offering. "This really gives us the runway that we were looking to in terms of funding our operations," Erik Prusch, chief financial officer for the company, said in a Dec. 6 call with investors. 

Clearwire, which still needs billions of dollars more to complete its networks, has said it is looking into other funding options such as a potential sale of wireless spectrum or an equity investment from Sprint or T-Mobile USA, which would rent space on Clearwire's network at lower rates. The company said in December that it had hoped to snag another round of funding by year-end or early 2011 with the potential for a spectrum sale of as much as $2 billion.

Recently, Clearwire said that it plans to put a stop to its retail expansion plans and focus on its existing network. Expansion plans drained the cash-strapped company of resources.  The latest move could pave the way for a new funding deal with Sprint. The retail expansion has bred tension with Sprint, which owns a majority of Clearwire stock, because it puts Clearwire into competition with Sprint for customers. Sprint buys capacity on Clearwire’s network wholesale and then sells high- speed wireless service to consumers and businesses.

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