UPDATE 4-Clearwire retracts timing for profit target
* Blames Sprint moves, cannot say when will turn profit
* Q3 EPS $0.53 vs year-ago $0.56
* Clearwire says to exceed FY target of 10 mln subs
* Shares fall 4 cents, or 2 pct, after report
By Sinead Carew
NEW YORK, Nov 2 (Reuters) - Clearwire Corp on Wednesday retracted its target of an operating profit in the first quarter of 2012, blaming recent moves by its biggest client, Sprint Nextel , that reduce usage of its network.
Clearwire, which is majority-owned by Sprint, told an analyst conference call that it could no longer forecast when it would report a profit before interest, tax, depreciation and amortization as it needs to work out how Sprint price changes for certain services will affect Clearwire's network usage.
Its shares fell 2 percent to $2.00 after the news.
The wireless service provider, which is seeking almost $1 billion in new financing to fund operations and upgrade its network, also said that its profit outlook was further muddied by uncertainty about how much Sprint's launch of Apple Inc's iPhone will reduce usage of Clearwire's network.
Until now, Sprint has depended on Clearwire's high-speed network for providing high-speed services to customers using its most sophisticated phones. Sprint had been heavily promoting phones using Clearwire's network.
Clearwire said it has enough funding to run the business for the next 12 months as it has been cutting expenses as part of its push to get closer to a profit.
But investors will still be anxious to see the company raise financing and extend its relationship with Sprint and to sign up new customers as soon as possible.
"It's encouraging they're bringing the costs down. The bigger picture is getting the funding and the relationships to make this work over time," said Pacific Crest analyst Steve Clement.
SPRINT IPHONE UNCERTAINTY
Since the vast majority of Clearwire's growth comes from Sprint, some investors have said they will not be comfortable investing in Clearwire unless it manages to sign up more wholesale customers besides Sprint.
Clearwire has had a tempestuous relationship with Sprint.
Sprint executives triggered a 32 percent drop in Clearwire's stock on Oct. 7 when they told an investor conference Sprint would stop selling phones using Clearwire's service at the end of 2012, and said Spring could benefit from a Clearwire bankruptcy.
Chief Executive Erik Prusch told analysts that Clearwire has been negotiating with Sprint about funding, about extending their agreement for Clearwire's existing service beyond the end of 2012, and about expanding that agreement to include a new technology both companies want to adopt.
But while Clearwire has made some progress in discussions with Sprint, Prusch said the companies are "not together."
"We've got some goals we're going after," he told Reuters. "They've got other goals they're interested in."
Despite Clearwire's comments about network usage, the company said it expects to exceed its previous target of 10 million subscribers by the end of 2011.
This would imply that it still expects net additions of more than 460,000 customers in the current quarter as Clearwire ended the quarter with 9.54 million customers.
"We're looking at the numbers every day. We see subscribers and we see subscriber additions," Prusch told Reuters.
FUNDING SEARCH ONGOING
The executive said he was still pursuing a mixture of funding options such as equity investments from strategic partners such as Sprint as well as the potential for incurring new debt and paying for its upgrade with vendor financing.
Prusch said Clearwire has also been fielding calls from potential buyers of spectrum that it is not currently using.
He said that a sale of spectrum could be the most complicated way to raise funding but noted that a sale would not need approval from shareholders such as Sprint, which does not have majority voting rights at Clearwire.
Clearwire posted a net loss of $84.79 million, or 53 cents per share, compared with a loss of $139.4 million, or 56 cents per share, in the year-ago quarter. Its revenue rose to $333.18 million from $142.16 million in the year-ago quarter.
Excluding unusual items, Clearwire's loss was 34 cents per share compared with Wall Street expectations for a loss of 40 cents per share according to Thomson Reuters I/B/E/S.
While the company gave specific forecasts for revenue and subscriber numbers for the quarter earlier this month, it had not given an estimate for earnings per share.
Clearwire said it cut its 2011 capital spending budget to less than $300 million, which is about $100 million lower than its previous target. But this excludes any spending on a network upgrade it wants to start as soon as possible if it gains new funding.
Clearwire shares fell 4 cents to $2.00 after closing up 19 cents, or 10 percent, at $2.04 on Nasdaq.
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