July 26, 2012 / 8:45 PM / 5 years ago

UPDATE 2-Clearwire loses customers but raises financial targets

* Boosts revenue, loss outlook

* Hopes to make progress in wholesale agreements in 2012

By Sinead Carew

NEW YORK, July 26 (Reuters) - Wireless service provider Clearwire Corp said it lost customers in the second quarter, but hopes to lose less money than it had expected in 2012 as it strives to conserve cash.

Risk-wary investors have pushed down Clearwire shares in recent months in the absence of any news about the additional funding it would need to expand its high-speed wireless network and keep the business afloat long term.

Clearwire, whose biggest shareholder is Sprint Nextel, said Thursday it has enough funding to last "at least 12 months" and noted that its cash position would be helped this year by an estimated slight increase in revenue and cost cuts.

Sprint is also Clearwire's biggest wholesale customer, renting capacity on its network to serve Sprint customers.

But Clearwire reported a net loss of 8,000 retail customers and a net loss of 34,000 wholesale customers for the second quarter said it expects more wholesale losses for the rest of 2012 because Sprint's sale of the popular Apple Inc for its own network is drawing away customers from Clearwire.

The loss of wholesale customers will not hurt revenue this year because Sprint is paying Clearwire a fixed fee, but Stifel Nicolaus analyst Christopher King said it could still hurt Clearwire's future funding prospects.

"It also becomes a bit of a chicken and egg thing. They are going to have to show they can grow the business but it's hard to do that when you're focused on cash conservation," King said.

Clearwire, which ended the second quarter with $1.2 billion in cash, has long said that it is considering new funding sources including adding other wholesale customers besides Sprint and possibly selling unused spectrum.

Chief Executive Erik Prusch said the company is still having "a lot of discussions" and expects to make progress in forging new wholesale agreements in 2012, but he would not give details.

"I don't see anything that precludes our ability to make progress," the executive told Reuters.

Meanwhile, a fixed revenue agreement with Sprint will keep Clearwire afloat while it prepares for a high-speed wireless service upgrade in five markets by the middle of next year.

Clearwire estimated a 2012 adjusted loss, before interest, tax, depreciation and amortization, of $175 million to $225 million, below its previous loss forecast of $250 million to $350 million.

The improvement will come from cost cutting measures and better-than-expected revenue from retail customers Clearwire signs up directly. Prusch said the second-quarter retail customer decline was "seasonal" and declined to give a forecast for retail customer growth.

The company also raised its revenue target range for the year to $1.2 billion to $1.3 billion from its previous expectation for $1.15 billion to $1.25 billion.

For the second quarter its adjusted loss before interest, tax, depreciation and amortization narrowed to $34.4 million from a loss of $79.6 million in the year-ago quarter.

Revenue fell to $316.9 million from $322.6 million and compared with analyst expectations for $320.83, according to Thomson Reuters I/B/E/S.

Clearwire shares were little changed after closing up 12 percent at $1.01 on Nasdaq. The shares have fallen about 60 percent since late March as investors have fled to more established telecommunications providers.

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