Clearwire Adds Subscribers, Stems Losses in Third Quarter
Years ago, Bellevue, WA-based Clearwire (NASDAQ: CLWR) placed a big bet. It thought that an Intel-backed wireless technology called WiMax would become the foundation of the “4G” broadband data networks that will eventually take the place of today’s 3G networks. It bet wrong—a rival technology called long-term evolution (LTE), backed by Verizon, AT&T, and other carriers, is winning the 4G battle in North America. But quarterly earnings results from Clearwire today show that the company is gradually bouncing back from its mistake.
Clearwire said that despite the spread of LTE, it has grown the subscriber base for its WiMax-based network to 9.54 million, an increase of 6.73 million over the figures from one year ago. Clearwire added 1.89 million of those subscribers in the third quarter. Revenues for the quarter totaled $332.2 million, a 13 percent increase over second-quarter 2011 revenues of $293.7 and a 134 percent increase over third-quarter 2010 revenues of $142.2 million.
Of course, the company is still hemorrhaging cash—just not quite as fast. After accounting for interest, taxes, deductions, and amortization, third-quarter losses at the company totaled $46.4 million, compared to second-quarter losses of $108.5 million.
The numbers were pretty much in line with financial figures that Clearwire pre-reported back on October 13. That disclosure was intended to stem a stock slide prompted by remarks by Sprint CEO Dan Hesse indicating that Sprint wouldn’t be leaning on Clearwire to build out its own national 4G network. The tactic seemed to help; after hitting an all-time low of $1.28 per share on October 10, Clearwire’s share price rebounded a bit, closing today (before the release of the third-quarter data) at $2.02.
Clearwire is now scrambling to switch over to LTE technology, arguing that it’s still got one big advantage—a fast, all-Internet based backend network. “Today Clearwire is the only operational 4G wholesale business combining an all-IP network, substantial spectrum resources, and a technology roadmap to serve the growing demand for mobile broadband,” Clearwire president and CEO Erik Prusch said in a statement today. “We believe Clearwire’s deep spectrum resources are capable of meeting the urban demand that will likely strain the lower-capacity LTE deployments planned by other wireless operators.”