Clearwire losses mount despite subscriber growth

Clearwire is adding more customers and its revenues climbed in the first quarter, but losses mounted as it spent more money to service the new subscribers.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

Clearwire's revenue grew as it added loads of new subscribers in the first quarter of 2011. But the wireless company's losses widened as it spent more to grow its business.

Clearwire, which is building a nationwide 4G wireless network, today reported losses of $227 million, or 93 cents a share in the first quarter, compared with a loss of $94 million, or 47 cents a share, during the first quarter of 2010.

But revenue more than doubled to $242 million as the company added a record 1.8 million subscribers during the quarter. It now serves a total of 6.1 million subscribers on its network, compared to about 971,000 subscribers during the same quarter last year.

Analysts had expected the company to lose 53 cents per share on revenue of $237 million, according to a poll by Thomson Reuters.

Clearwire is benefiting from a growing appetite for broadband wireless services, but the growth is coming at a hefty expense. The company's operating expenses rose 81 percent to $929.6 million.

The company has been slashing costs and revising growth plans to stem losses. Last month, it settled a wholesale pricing dispute with Sprint Nextel, its largest wholesale customer and majority owner. The deal provided Clearwire with much needed cash and also helped further cement Sprint's commitment to the company.

Sprint uses the Clearwire 4G wireless network, which uses a technology called WiMax for its 4G smartphones and services. Sprint had a head start in the 4G market, but is facing stiff competition from Verizon Wireless, which launched its 4G network using a technology called LTE in December. This summer AT&T is also expected to launch its 4G network that uses LTE technology.

As part of its cost cutting, Clearwire is scaling back some of its retail activity. And earlier today it announced that it would cancel its prepaid service called Rover. Clearwire announced Rover in August. The service was aimed at the youth market and offered several prepaid options including a $5 daily, $20 weekly, and $50 monthly prepaid service without a contract. The company was selling the 4G USB data stick for $100 and the 4G hot spot Puck for $150.