Wireless broadband services provider Clearwire (Nasdaq: CLWR) will deliver its fourth-quarter earnings later this month. Let's take a peek behind the curtain and see what's in store.
What analysts say:
- Buy, sell, or waffle? Fifteen Wall Street analysts register an opinion on Clearwire, with eight recommending a buy, while seven say hold. In our Motley Fool CAPS database, 277 investors have rated the stock, which has earned a two-star rating.
- Revenue. On average, analysts see revenue of $46 million.
- Earnings. Analysts expect the red ink to keep flowing to the tune of a $1.00 per-share loss.
What management says:
Clearwire updated the analysts at the end of January. Even with the background of questions about a possible reunion with Sprint Nextel (NYSE: S), management remained upbeat and said it continues to make progress in developing a roaming agreement between the two. Though analysts were hoping to hear that a resource-sharing agreement was rekindled, CEO Ben Wolff instead noted that the two companies "have aligned on a common network architecture with common features, functionality and performance expectations."
Management also reported that it expects to achieve $45 million in service revenue and 394,000 subscribers in the fourth quarter.
What management does:
Progress in Clearwire's initial WiMAX markets looks good, but there's not an extensive operating history at this point.
|
2005 |
2006 |
1Q 2007 |
2Q2007 |
3Q2007 | |
|---|---|---|---|---|---|
|
Service Revenue (thousands) |
$8,451 |
$67,598 |
$29,275 |
$35,484 |
$41,297 |
|
Net Loss (millions) |
$140 |
$284 |
$93 |
$118 |
$329 |
|
Subscribers (thousands) |
62.3 |
206.2 |
258.0 |
299.0 |
348.0 |
Source: Capital IQ
One Fool says:
Assuming Clearwire makes great strides in spreading WiMAX nationwide, new risks will certainly pop up for investors. For one, Clearwire noted that there is a strong competitive response from cable and telecom operators. And Clearwire also has a revenue-sharing agreement with Intel (Nasdaq: INTC) -- much the same way that Apple (Nasdaq: AAPL) gets a cut of AT&T's (NYSE: T) revenue for iPhone usage -- that kicks in once laptops with Intel's WiMAX chips start showing up on the network. Both issues will cut into margins and should be watched.
On a positive note, Clearwire management shrewdly noted that it will tap the brakes a little and moderate the development of new markets in light of tighter capital markets. But dramatic changes in the forward business plan could happen in short order if a new deal with Sprint Nextel or funding from rumored sources such as Google (Nasdaq: GOOG) or Best Buy (Nasdaq: BBY) materializes. Either way, Clearwire is on the same path -- the amount of time to get there is the open question.
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