Clearwire Corp. on Thursday posted a $118 million-dollar loss for the fourth quarter, even as subscriber revenue rose.
It said service revenue rose to $59.7 million in the fourth quarter, compared with $45.4 million one year ago.
The WiMAX service provider, known for providing wireless DSL-replacement service, was reborn in 2008 after taking over Sprint-Nextel Corp.’s “XOHM” mobile 4G WiMAX business, with the backing of Sprint, Google, Intel and various cablecos. The company has the aim of providing pervasive mobile broadband service nationwide.
But despite $3 billion in recent additional funding, the current capital climate has caused delays in the rollout, calling into question whether the operator would be able to meet its targets before running out of cash. It has $1.2 billion in cash now, and about $2 billion in other assets.
So far Clearwire has rolled out its “Clear” mobile WiMAX service in one market: Portland, Ore.
Today the company addressed this, saying it would be structuring the deployment of new markets to "enable the company to manage current cash resources into 2011." It forecast total cash spending of $1.5 billion to $1.9 billion for 2009, to deploy eight more markets this year: Atlanta, Chicago, Charlotte, Dallas/Ft. Worth, Honolulu, Las Vegas and Philadelphia. And Seattle will be upgraded from pre-WiMAX gear to 802.16e.
Boston, Houston, New York City, San Francisco and Washington, D.C. are slated for deployment next year, amongst others.
Clearwire’s business model relies on widespread deployment to work: with a national coverage footprint, the ultra high-speed service becomes compelling for road warriors and others looking to get the most out of their netbooks, smartphones and laptops. It also appeals to heavy broadband users on a local level. And the idea is that eventually, the economies of scale and interest level will be convincing enough for consumer electronics makers to embed WiMAX into a range of smart devices.
To improve the road warrior proposition in absence of widespread deployment, Clearwire said it plans to introduce a dual-mode modem this summer that can connect to Sprint's 3G network as well as to the Clear network.
The company is bullish going forward. Though there are no embedded devices on the market right now, it said it expects there to be nearly 100 devices by the end of the year.
Subscriber revenue should show continued growth going forward: Portland's initial sales were more than double any of the company’s fixed broadband replacement markets it said, but were not included in this earning report.
Clearwire shares closed at $3 today.
