Foolish Forecast: The Unsinkable Clearwire

Clearwire (Nasdaq: CLWR  ) , the specialist in wireless broadband services, wants to start your weekend off right with its third-quarter earnings release this Friday. But will it mean a weekend of celebration or one of loathing?

What analysts say:

  • Buy, sell, or waffle? A total of 14 Wall Street analysts give opinions on Clearwire's stock. Of this group, eight are wearing party hats and rate the stock a buy, while five haven't sent in the RSVP yet and maintain a hold rating, and another is a party pooper with a sell. In our Motley Fool CAPS investor database, 253 of our 73,000 players have come together to give the stock a subpar two-star rating.
  • Revenue. On average, analysts predict revenue of $38.4 million.
  • Earnings. Analysts expect losses to continue, and on average, they estimate a loss of $0.78 per share.

What management says:
Clearwire groups its financial results according to phases of its market launches, with its "initial markets" -- a group of its first 25 markets in the U.S. -- given prominence. Management takes its time going through separated financials for the initial markets to give investors confidence in the long-term viability of its business. CEO Ben Wolff sums up the approach by stating, "With 14 of these markets cash flow positive and a number of additional markets poised to become cash-flow positive over the next two quarters, we are proving that we can succeed in a variety of different types of markets across the country."

What management does:
No wonder Clearwire breaks apart the financials, because just a quick scan of the consolidated results would give all but the most informed investors the scare of their life. While the business accelerates, significant losses continue to grow.

2004

2005

2006

1Q 2007

2Q2007

Service Revenue (thousands)

$243

$8,451

$67,598

$29,275

$35,484

Net Loss (millions)

$33

$140

$284

$93

$118

Subscribers (thousands)

3.5

62.3

206.2

258.0

299.0

One Fool says:
Sprint Nextel
's (NYSE: S  ) ongoing operational troubles have the company evaluating how to proceed with the partnership it created with Clearwire to build out a nationwide WiMax network. As a result, investors are feeling squeamish that more of the burden will fall back on Clearwire.

But there's a strong ecosystem building around WiMax, including proponents such as Intel (Nasdaq: INTC  ) and Motorola (NYSE: MOT  ) , that won't let Clearwire fail. And with other companies such as Nokia (NYSE: NOK  ) , Alvarion (Nasdaq: ALVR  ) , and Alcatel-Lucent (NYSE: ALU  ) providing equipment or services for the new broadband standard, it's in the interest of many players here for progress on the network rollouts to continue. Just how long and costly that process becomes will be of keen interest to Clearwire shareholders.

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