Clearwire IPO….selling WiMax and Red Ink
What's with all these money-losing telecom companies going public these days? First, it's Vonage with its troubling addiction to marketing; then Mitel Networks files its prospectus as its spends aggressively on sales, marketing and R&D to compete with Cisco, Avaya, et al in the IP communications market; and now Craig McCaw's Clearwire Corp. announces plans to raise as much as $400-million through an IPO. If you have an insatiable appetite for wireless and a strong tolerance for red ink, Clearwire is definitely for you. In 2005, the company lost $139.9-million on sales of $33.4-million (which include equipment sales of $25-million). The company said it has 88,000 wireless broadband customers in the U.S. and 11,500 in Ireland and Belgium. The broadband market needs more competition but it's going to be tough and expensive for Clearwire to capture a large enough foothold to create a viable business. The carriers are moving aggressively with DSL to offset the loss of local phone lines while the cablecos are pushing broadband as a way to push in the phone business. Clearwire's largest shareholders are Craig McCaw's Eagle River Holdings (47.2%), Bell Canada (14.4%) and entrepreneur Jim Clark (7%). Bell invested $100-million in Clearwire last year, and provides Clearwire with the technology it uses to provide VoIP service.
Update: For more Clearwire's IPO plans, check out Om Malik. VentureWire quotes Visant Strategies analyst Andy Fuentes, who believes Clearwire will need $5-billion to compete nationally with the mobile carriers. TelcoTrash has an insightful list of the key parts of Clearwire's S-1.
May 28th, 2006 at 1:02 am
A broker friend on mine is hot on this IPO, but I think it is because of McCaw. I am tying to understand how what the future competitive broadband/wireless environment will look like in 5 years to see if investing in the IPO does make any sense.
Can you shed more light on what you think Clearwire’s Strategy is within the broadband/wireless arena and how successful WiMax could be in light of huge competitors with significant resources such as Verizon and AT&T with their quaduple play strategies, resources and buildout plans? The Cable co's are already shaking in their boots from the telcos, so is Clearwire just planning to go after rural markets (30%) of the US and select b2b niches in major markets?
In the wireless arena, WiMax would certainly be more robust than 3g, and what about 4g? What do you think their strategy be vis a vis to compete with the voice/data/content capabilities of the wireless carriers?
What is Clearwire's strategic advantage be and how does it translate to and exit strategy in 5 - 10 years?
thanks for any insights