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Clearwire Corporation (CLWRD) Message Board

  • bjspokanimal bjspokanimal Apr 25, 2013 6:13 PM Flag

    Clearwire's small, $42 million EBITDA loss and what it means

    First of all, the ability of this company to sustain itself has nothing to do with net EPS losses... it has everything to do, however, with EBITDA.

    The reason is because the ability of this company to thrive has everything to do with the sustainability, and deployment, of it's cash... and EBITDA removes non-cash expenses from it's earnings.

    Put another way, depreciation expense is a non-cash item, because it represents the amortization (for lack of a better term) of cash that was spent years ago as cap-ex to build the company's network. That cash is already out the door.

    So, with a $42 million negative EBITDA ($50 million when you include "wasted" expenses related to sprint's ridiculous, $2.97 bid) and another $50 million in cap-ex spent building CLWR's TD-LTE network... we're talking about 1/8 of the company's cash spent in Q1... and the money spent on TD-LTE is certainly money well spent.

    Now let's consider what happens if Clearwire's executives, who have been bought off by sprint via a cashable stock option scheme, were to accept Verizon's offer to buy 1/10 of their spectrum for $1 to $1.5 billion. That would push clearwire's cash holdings to around $2 billion, pay for the TD-LTE build, and leave enough dough in the kitty to pay for the next 200 annual picnics over at dish network.

    Is it any WONDER that Crest is taking the activist stance that it is...

    ... they are absolutely RIGHT about the need to reject sprint's ridiculous, $2.97 buyout bid.


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