* Q1 share loss $0.44 vs loss $0.89 year ago
* Rev $322.6 mln vs Street view $314.56 mln
* Cuts 2012 capex target
* Sees making progress in wholesale deals this year
* Shares rise 5 percent to $1.54 in late trade
By Sinead Carew
April 26 Clearwire Corp's first-quarter
revenue beat Wall Street expectations due to strength in its
retail business, and its loss narrowed as it cut costs, sending
its shares up 6 percent.
The company, majority owned by Sprint Nextel, also cut
its capital spending budget for the year even as it kept its
network upgrade deadline for end of June 2013.
Since the company recently had to seek additional financing
and would need more funding if it wants to expand its network
upgrade, Roe Equity Research analyst Kevin Roe said any revenue
surprise or cost reduction is good news for investors.
"They're doing a good job managing the cost side to make
their cash last longer," said Roe.
While the majority of Clearwire's business is from wholesale
clients, of which Sprint is by far the largest, Roe also noted
that it was a good sign that the company's retail business did
better than expected in the quarter. Clearwire said it had total
net subscriber additions of 586,000 in the quarter.
Revenue rose to $322.6 million from $236.8 million in the
year-ago quarter and compared with Wall Street expectations for
$314.56 million, according to Thomson Reuters I/B/E/S.
The company said its quarterly loss narrowed to $181.8
million, or 44 cents per diluted share, from a loss of $226.96
million, or 89 cents per share.
Clearwire cut its capital spending budget for 2012 to a
range of $350 million to $400 million from its previous target
of $450 million to $550 million as spending for a network
upgrade will occur later than it had expected.
The company said it expects to use vendor financing for the
majority of the roughly $300 million it will spend on equipment
for its network upgrade with a high-speed technology Long Term
Clearwire's biggest wholesale customer Sprint is also
building an LTE network that will compete with Clearwire's
current WiMax network.
As a result, Clearwire is working to lessen its dependence
on Sprint by seeking wholesale agreements with other wireless
It has already signed a agreement to provide wholesale
services to Leap Wireless, a provider for
Chief Executive Erik Prusch said the company expects to make
significant progress this year in signing more wholesale
clients. However, he would not discuss specific talks.
"They'll range from large to small (customers)," Prusch said
in an interview.
Some investors are worried that demand for Clearwire's
service will lessen because its biggest rival Verizon Wireless
has said that it would like to sell some wireless
airwaves. Clearwire's shares have been depressed
since Verizon's announcement.
On Thursday they rose 5 percent in after hours trading to
$1.54 after closing up 8.9 percent at $1.47 on Nasdaq.
Prusch brushed aside those concerns, saying Verizon Wireless
was not selling enough spectrum to solve an industry-wide
shortage of airwaves. He said the spectrum Verizon was selling
had problems including the potential for interference with
"I can't imagine anybody's holding out for getting a piece
of that," Prusch said in the interview.
The executive said Clearwire, which has more spectrum than
it needs right now, was in no rush to sell any of it. He said,
however, that the company would evaluate any opportunities for a
spectrum sale and, "We'll opportunistically look for other
avenues of funding going forward."
Aside from the vendor financing Clearwire is seeking for the
network upgrade later this year, Prusch said the company has
enough funding to last it through the first phase of its LTE
network project. This involves upgrading 5,000 of the company's
16,000 cell sites by the end of June 2013.
Clearwire said it would initially upgrade sites where it
expects the heaviest demand.