Wireless broadband service provider Clearwire (NASDAQ:CLWR) will be broadcasting its second-quarter earnings on Monday. Let's see if the message from the company is expected to be a clear signal or static.
What analysts say:
- Buy, sell, or waffle? A total of 13 Wall Street analysts follow Clearwire. Of this group, 10 rate the stock a buy, while three say to hold. In our Motley Fool CAPS investor database, 228 of our 60,000 players have a slightly different outlook on the stock, collectively giving it a more pessimistic two-star rating.
- Revenue. On average, analysts predict revenue of $34 million.
- Earnings. No one -- even Clearwire -- expects to be making money at this point. Analysts are looking for a loss of $0.60 per share on average.
What management says:
Clearwire had a busy quarter, even for a young company building out a massive new broadband network. The company made strides in launching several new markets for its service and was able to secure more financing to feed the cash-burning machine. Following the $900 million it received from partners Intel (NASDAQ:INTC) and Motorola (NYSE:MOT) last year at this time, Clearwire closed on a $1 billion term loan led by banks Morgan Stanley, Merrill Lynch, JPMorgan Chase, and Citigroup.
The financing not only allowed the company to reorganize debt, but also improve its credibility with investors. Chief Financial Officer John Butler said that "by opportunistically accessing the capital markets, we expanded our investor base and further strengthened the company's balance sheet." With most companies, another big dip into the debt well would turn off many investors, but with Craig McCaw's ventures, high leverage is expected.
What management does:
As a recent IPO, Clearwire doesn't have much of a quarterly operating history to speak of, but we're gradually getting a better picture of operations as more markets come on line. As expected, revenue and subscribers are ramping up fast, but losses continue.
|
2004 |
2005 |
2006 |
1Q 2007 | |
|---|---|---|---|---|
|
Service Revenue (thousands) |
$243 |
$8,451 |
$67,598 |
$29,275 |
|
Net Loss (millions) |
$33 |
$140 |
$284 |
$93 |
|
Subscribers (thousands) |
3.5 |
62.3 |
206.2 |
258.0 |
One Fool says:
Beyond financing deals, the big story with Clearwire lately is the partnership with Sprint Nextel (NYSE:S) to share the cost of deploying a nationwide WiMAX network. The partnership will help each company dramatically cut costs and make it more likely that strategic investors as well as Wall Street will support their plans going forward. Combining Clearwire's spectrum holdings with that of Sprint Nextel means the two entities have all the pieces they need to go ahead with a nationwide network build-out.
With a nationwide WiMAX network looking more like reality than fantasy at this point, skeptics who initially doubted Clearwire could even get off the ground likely will focus on the quality and eventual profitability of the service. But with each quarter, as more customers sign up, Clearwire is proving that the economics are there.
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Fool contributor Dave Mock thinks adding the suffix MAX to anything makes it sound way cooler. He owns shares of Intel and Motorola. Dave is the author of The Qualcomm Equation. OK, so the Fool's disclosure policy doesn't sound too cool as disclosure policyMAX.
