Clearwire tops expectations
Seattle Times technology reporter
Clearwire's second-quarter financial results Monday highlighted a particularly active period that drew a more specific road map for the young company while leading to higher revenues and wider losses.
"I would say that it was a fairly active quarter for us," said Clearwire Chief Executive Ben Wolff. "In almost every quarter, we have a significant transaction, but this time a lot of things happened all at once."
Founded by wireless entrepreneur Craig McCaw, Clearwire is building a new-generation wireless broadband network in the U.S. and abroad that competes with both wireline broadband providers and cellular companies.
During the three months ended June 30, it signed reseller agreements with satellite TV companies DirecTV and EchoStar; it agreed to work with Sprint Nextel on rolling out a joint nationwide mobile WiMax network; and it closed a $1 billion loan transaction.
In addition, the company added 41,000 subscribers for a total of 299,000.
Financially, it increased revenues 32.4 percent to $35.5 million compared with the same period a year ago. That beat analyst expectations, who estimated that the company would record revenues of $33.3 million, according to Thomson Financial.
However, the company showed a loss of $118 million, or 72 cents a share; analysts were expecting a loss of 59 cents.
In regular trading, Clearwire's stock rose 72 cents, or 2.5 percent, to close at $29.52. In after-hours trading, the stock continued to climb, increasing 18 cents to $29.70.
Wolff said separating the business into two components — construction and development on one side, and operations on the other — provides some insight into how Clearwire is evolving in the 43 markets it now serves.
"If you take a look at our initial markets, you are talking about cash-flow-positive results," he said. "The losses are driven by the new markets.... We have two different sides of business."
He said expenses and losses increased because Clearwire launched five new markets during the quarter.
Among the first 25 markets, on the other hand, 14 are cash-flow positive (not including some corporate expenses). In addition, one in nine homes in those markets are subscribers.
The company also reported that gross margins in those more mature markets climbed to $16 million during the quarter from $6.7 million a year ago — an increase of 139 percent.
On Monday, the company had several announcements about its technology and partnerships:
• It will start to test a PC card in a few unspecified markets. The card will fit into a laptop and should be more portable compared with the current modem, which is the size of a book and is mostly used in the home. Using the service with the PC card will cost $59.99 a month; residential service with the modem costs $42.95 a month.
• The company also said it will test a faster residential connection speed at 2 megabits per second (Mbps), bursting up to 4 mbps, for $44.99 a month (that compares with 1.5 Mbps and 3 Mbps for the top-speed plan). It will be tested in the same undisclosed markets as the PC card.
• The company provided more details about its partnership with Sprint Nextel, releasing a map showing where it will launch future service. Clearwire will cover central and Northern California, the Pacific Northwest, the Rocky Mountain region, portions of the Midwest and most of the South, Alaska and Hawaii.
Ultimately, Clearwire would cover 75 percent of the land area in the U.S., and 40 percent of the population. Sprint would be responsible for the remaining areas.
Tricia Duryee: 206-464-3283 or email@example.com
|Dollar figures in thousands, except per share; parentheses denote losses.|
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