Clearwire: 'Google Believes in Us'

Clearwire (CLWR) has a larger war chest, but still lacks a significant subscriber base for its WiMax, or 4G, wireless services. However, the company maintains that it is in the right place at the right time to become a powerhouse.

Those were some of the takeaways as Clearwire CEO William Morrow put on a confident front on the company’s third quarter earnings call on Tuesday. Morrow addressed why Google (GOOG) sat out the latest $1.56 billion funding round and how the wholesale business—Time Warner Cable (TWC) and Comcast (CMCSA) reselling WiMax service—will be huge.

The big question here is whether you buy Morrow’s confidence. Clearwire is forging ahead into new markets in the fourth quarter and continues to have an aggressive build-out plan for 2010. Clearwire is entering the following markets by the end of the year: Atlanta, GA; Baltimore, MD; Boise, ID; Chicago, IL; Las Vegas, NV; Philadelphia, PA; Charlotte, Raleigh, and Greensboro, NC; Honolulu and Maui, HI; Seattle and Bellingham, WA; Portland and Salem, OR; and Dallas/Ft. Worth, San Antonio, Austin, Abilene, Amarillo, Corpus Christi, Killeen/Temple, Lubbock, Midland/Odessa, Waco and Wichita Falls, TX.

Among some of the key items:

Morrow on Google and why it didn’t participate in Clearwire’s latest funding round:

I’ll deal with the Google issue right up-front — there’s been some questions and even some already reports out there on the street, on main street about why Google didn’t participate. You know, Google believes in us and they are supporting us from a product management point of view, from a strategic point of view. You know, they have been great about us understanding what are the Internet trends that exist. They have put $500 million into the company when this thing got going which was the largest — one of the largest investments they have ever made into a different company. So the fact that they are not participating on it partly relates to this is how they can better support us, and so I wouldn’t read anything negative into that whatsoever.

Morrow on the importance of Comcast, Sprint (S) and other wholesale partners on selling WiMax service:

Our wholesale partners comprise the largest channel for us to access customers and we believe it represents a very meaningful future revenue opportunity for Clearwire. Their distribution channels have provided access to a base of over 100 million existing customers between them, most of which are candidates to be cross-sold a 4G data product on the Clear network.

Morrow on the future:

We continue to believe that we are in the right place at the right time. If ever there was a rising tide that is lifting all boats, this is it. As I’ve said before, we don’t have to unseat any of the giant telcos in order to be successful. I am more confident than ever that we will gain our fair share of this brand new market opportunity.

A few thoughts:

• I’m not sure that Clearwire can get by without unseating a few Verizon (VZ) and AT&T (T) wireless broadband accounts. The consumer only has so much income. And while 4G service is fine its reach is tethered to the big markets Clearwire has targeted. Meanwhile, LTE, a rival 4G technology, is being pushed by Verizon, which competes in most of Clearwire’s markets.
• Clearwire said it was confident that it could got back to get more financing in the future. Clearwire will be an important company because it will build out WiMax infrastructure. It remains to be seen whether Clearwire actually makes money.
• The bottom line is that Clearwire’s user base is small. The company added 44,000 net customers in the third quarter. It’s too early to pan those figures yet given Clearwire is rolling out a bunch of new markets. However, this time next year Clearwire will need to show a lot more than 555,000 subscribers on the books.

Comments

[jack dee:]

Clearwire is having a really tough time moving users to its services.

2 year contracts , high prices , slower connections and some of the worst customer service reviews I have ever seen.

The service is not mobile, so really what does it offer. I would not invest anything in clearwire, I struggle to see how they even got funding.

Nov 11 12:34 PM

[Rico2:]

I fail to see how CW's customer serivce is any different better or worst than any other TELCO out there so I would drop the "worst customer service I've seen" act.. And I'm using the service in the Seattle market ahead of launch and fail to see how my moving around the city while using the internet isn't considered mobile..What is mobile by your definition???


On Nov 11 12:34 PM jack dee wrote:

> Clearwire is having a really tough time moving users to its services.
>
>
> 2 year contracts , high prices , slower connections and some of
> the worst customer service reviews I have ever seen.
>
> The service is not mobile, so really what does it offer. I would
> not invest anything in clearwire, I struggle to see how they even
> got funding.

Nov 11 01:10 PM

[User 113523:]

I have the service in Portland and it works great; very fast and reliable. I am on a month to month contract paying $30/mo. I previously had Comcast and had constant intermittent problem at twice the price.

Nov 11 07:32 PM

[Geddy:]

Do they have a mobile device...pretty simple question.


On Nov 11 01:10 PM Rico2 wrote:

> I fail to see how CW's customer serivce is any different better or
> worst than any other TELCO out there so I would drop the "worst customer
> service I've seen" act.. And I'm using the service in the Seattle
> market ahead of launch and fail to see how my moving around the city
> while using the internet isn't considered mobile..What is mobile
> by your definition???

Nov 12 09:10 AM

[Titan_X:]

You asked do they have a mobile device?

Answer: Everything they sell is mobile. The fact that you posed question shows you are speaking here with little knowledge of the product in general.

Nov 12 11:58 AM

[Geddy:]

So Titan_X, they sell Blackberry's (or similar smartphones) as well as voice devices? Come back again with your " knowledgeable" comments when you actually have something fruitful to add. Aircards alone (internal or external) do not make a mobile device.


On Nov 12 11:58 AM Titan_X wrote:

> You asked do they have a mobile device?
>
> Answer: Everything they sell is mobile. The fact that you posed question
> shows you are speaking here with little knowledge of the product
> in general.

Nov 13 09:40 AM

[Nextel Acce...:]

Google knows the power of 4G, you better believe there office is lit up by Clearwire and they are experimenting every day with these speeds

Nov 14 11:13 AM

[Scoli:]

In the first comment, Jack Dee wrote "The service is not mobile, so really what does it offer. I would not invest anything in clearwire, I struggle to see how they even got funding."

As you can see nowhere in this original text does it mention "Device". So we are not talking phones here, and even if he did. What is a laptop? Isn't it mobile computing, isn't sold as being portable? So why wouldn't internet service you can use on a portable laptop be considered a mobile service.

Nov 18 03:08 PM

[Nextel Acce...:]

the devices will come, the negative posts are from Verizon and AT&T employees who are likely concerned with having nothing in 4G. Particularly AT&T, who is getting bashed by Verizon with there pathetic 3G map on recent commercials

Nov 18 07:29 PM

[Geddy:]

@Nextel Accessories-and you having a login like that makes you a neutral observer??? Too funny! I believe you should probably be worried about who your next owner is! :)

Nov 19 11:35 PM

[sdfsdf:]

Today every thing is bundled and value priced. So to pay extra $30 to $40.00 a month does not make seance in to world of iPhone and Droid. For clear to work it or its partners have to come up with a device or plan that works for all types of mobile applications plus the build out is very capital intensive so this may turn out be like the satellite phone companies of the past superior in technology but inferior in terms of added value and use.

Nov 21 11:02 PM