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Clearwire Corporation (CLWRD) Message Board

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  • sanddollars586 sanddollars586 Jan 7, 2010 4:24 PM Flag

    Clearwire has moved up in the new year

    These conclussions are as misguided as your earlier positions of the ultimate triumph of WiMAX over LTE and how embedded WiMAX consumer devices, mobile VoIP, the grid and the cloud were all going to propel CLWR to financial success. But not a single one of these things have happened.

    Finally you've reached the conclusion that whatever technological and shedule advantage CLWR's WiMAX once had is not enough to win against the strength of larger incumbents and that CLWR is basically a spectrum play.

    But to suggest that CLWR's shareholder's can achieve financial success just by "sitting back" and waiting for incumbents networks to collapse under the weight of their own success is equally naive.

    CLWR is burning cash at about $1.8 billion every 12 months and every new market CLWR launches increases their OPEX. Since CLWR's market penetration, ARPU and gross margins are low, they do not produce positive free cash flow which means their cash burn increases with every new market launched. Their current cash position gives them maybe 24 months before they are back to the capital markets diluting shareholders again, and again.

    And all the while CLWR is waiting for the rest of the industry to fail, CLWR can dilute itself into being a penny stock just like XM Radio, Winstar, and Teligent that also held nationwide spectrum and had unprofitable operations.

    When that happens vulture buyers can swoop in and buy up the failed assets on the cheap. What kind of business plan is that?