mocoNews.net - Earnings Call: Clearwire Gears Up For Q1 WiMax Launch; Looks At Using White Spaces

mocoNews.net - Earnings Call: Clearwire Gears Up For Q1 WiMax Launch; Looks At Using White Spaces

Tricia Duryee
mocoNews.net
Monday, November 10, 2008 8:00 PM

Clearwire's CEO Ben Wolff provided an update on the company's pending merger with Sprint's WiMax business during the company's third-quarter conference call. Following the FCC's approval of the deal last week, Wolff said the only approvals left to get are from Clearwire's shareholders, who are voting next Thursday, and from the company's lenders. Wolff: "There's no further action required by any governmental agency. It's a tremendous milestone for us, and we continue to work at closing the transaction by the end of the year." Still, after the financial results were reported this morning, the company's stock sank 28 cents a share, or about 3.5 percent to trade at around $7.76. Analysts had expected a loss of $1 a share on revenues of $55.5 million, according to Thomson Reuters (NASDAQ: TRIN), as reported by TheStreet. Actual results were a loss of $1.01 on revenues of $60.8 million.

Highlights from the earnings call after the jump

Release | Webcast | Transcript (via Seeking Alpha)

-- Mobile WiMax Efforts: Once the Clearwire-Sprint merger closes, the company will put a new management team in place and set its market priorities and new branding initiatives. Wolff hesitated to provide too many details, but said that between Sprint and Clearwire (NSDQ: CLWR), they have WiMax networks in some form of development that will cover 100 million people. When the first Clearwire WiMax network goes live in Portland, next year, it will include a new branding campaign that is designed to simply and clearly explain what the company is providing. The Portland market will encompass 680 square miles of coverage. In the past several months, 200 participants have been providing feedback on the network. Clearwire has been working with big box retailers, independent resellers and building up direct stores for the Q1 commercial launch. In addition, Clearwire has been working on building mobile WiMax as an overlay in Bellingham, Wash., where it currently operates its pre-WMax technology. Wolff said results have been positive, and that they believe they can overlay mobile WiMax for half the cost of building out an entirely new market.

-- On PC cards: Q3 was the first full quarter that Clearwire was selling the PC card. It said during the quarter, sales grew steadily, and that 15 percent of the cards were sold in combination with residential service.

-- Financial Outlook: The company said it has $368 million in cash, and will receive $3.2 billion when it closes the transaction with Sprint (NYSE: S). The company is reaffirming its 2008 revenues of between $205 and $215 million, and that it will add no material additions to its pre-WiMax subscriber base.

Q&A:

-- On the economy: Wolff: "Our gross ads have remained stable, even though we dramatically cut our spending from new customer acquisition perspective, so we are pleased to see the same demand from non-customers to buy our services. Looking forward at the bundle of services, we plan to offer a more capable product at a lower price point. We are the sweet spot for finding way to manage cash, while at the same time, letting people propel their lives forward. We have all the capacity we need to build more reasonably priced products and services."

-- On Clearwire's view of White Spaces: The FCC just approved the unlicensed use of white spaces in the U.S. for mobile broadband. Wolff: "It will be fascinating thing to watch evolve. It frees up spectrum on an unlicensed basis. We think of it as expanded Wi-Fi. It will be a good thing for more people to have more connectivity." Wolff added that the amount of spectrum that will be available will be inconsistent with rural areas having more than cities. "I think that presents some interesting opportunities for us, and will be looking at how we might leverage it in the rural areas." Wolff said the primary benefit will be that they could acquire more spectrum at zero cost, and he also hinted at Google's interest in the space: "And of course, our partner shares an interest in white spaces utilization."