Clearwire Needs More Than the $1 Billion in Cash to Operate
posted Sunday Feb 19, 2012 by Nicholas DiMeo
For those who haven't been following along through the Clearwire story, the wireless company has been going through a bit of turmoil as of late. Uncertainty, some changes and some money issues have been troubling the company for more than a year. Let's quickly recap to catch you up to speed.
- Clearwire Gets Some Help from Sprint for Future and Existing 4G Networks
- Clearwire Loses 3 Resellers
- Clearwire Might Skip on Upcoming Debt Payment
- Sprint's 4G Technological Evolution
You should be all caught up now. So this week, more financial issues came up for Clearwire. We have more on that after the break.
The company said that even after the $1 billion it received over the past two months, they still aren't in the best of shape. While the company now has $1.1 billion in cash, including short-term investments, to get them through the end of the year, they still may need to raise more money. On top of that, they have said they may even lose 5% of Clear growth because of the loss of the resellers. In a memo from the company:
We do not expect our operations to generate cumulative positive cash flows during the next 12 months. We may need to raise substantial additional capital to fund our business.
In their annual statements this week, Clearwire also mentioned that it would not be able to offer any more secured debt on its assets. Their saving grace is that they are in talks with Sprint, their largest customer, to put in place another long-term agreement, even though Sprint has adamently said they would be done with Clear's current 4G WiMax service in 2014.
Moving into LTE, however, might keep Sprint onboard after the recent LightSquared issues. Clearwire will be spending $600 million over the next two years on a new 4G LTE network, which may put Sprint on a more level playing surface with AT&T and more importantly, Verizon Wireless.
Through all the troubles, the company faces a $236.8 million loss this quarter, compared to only $128 million in losses last year, however revenue went up from $175.2 million to $361.9 million. Sprint will also be sending over $600 million in payment for the WiMax usage this year. There is some small good news out of all this and that is Clearwire was able to manage a cost-cutting measure that dropped its quarterly operating expenses from $1.2 billion LY Q4 to $785 million this year's Q4.
