Clearwire stays the course despite losses
Despite losing lots of money, the company is sticking to its plans to expand its WiMax wireless service to as many as 120 million people by the end of 2010.
Despite heavy losses, Clearwire is sticking to its plans to expand its WiMax wireless service to as many as 120 million people by the end of 2010.
The company, which was formed late last year by combining assets from Sprint Nextel and the original Clearwire, announced fourth quarter earnings Thursday. The company said it generated about $20.5 million in revenue and lost $118 million.
Even though the company said it would continue with its original plan to roll out its network, executives acknowledged that the speed at which new cities are added to the network may change depending on the economy.
The current plan calls for the company to extend its network to several cities in 2009, including Chicago, Atlanta, Las Vegas, Seattle, Honolulu, and Charlotte, N.C. New York, Boston, Washington, D.C., Houston, and San Francisco will be added the following year.
Clearwire's network uses a 4G wireless technology called WiMax, which provides much faster speeds than current 3G cellular technology. The company is already offering service in Baltimore and Portland, Ore. Clearwire also operates some fixed-wireless networks in other areas around the country.
The company has raised more than $3 billion from partners, Google, Intel, Comcast, and Time Warner Cable to build the new network. But many of these companies have already been forced to write down the value of those investments as Clearwire's stock has declined.
Meanwhile, Verizon Wireless has announced details of its plan to rollout its 4G wireless network, which uses a competing technology known as LTE. Verizon plans to test its network this year and will begin aggressively rolling out its service in 2010.
Chief executive officer Ben Wolff expressed confidence that his company has enough of a lead to take on the competition. "Clearly, a nationwide network will not happen overnight," he said. He added that competitors will not have ubiquitous coverage either from the start, and that it will take time for all players to expand their footprints.
As for the fact that Clearwire's investors have had to take write-downs already on their investment, CFO David Sach said those write-downs were merely taken due to accounting rules. And he said they shouldn't be viewed as a reflection on the company's future prospects.