What Happens to WiMax with Sprint on the Ropes?

Sprint Nextel (S) had a net loss of $29.5 billion, suspended its dividend and drew down its credit line for “financial flexibility.” Meanwhile, Sprint has jumped into the wireless price war fray with its own $99.99 a month all-you-can-eat wireless plan. Sprint’s woes wouldn’t be a big deal if the company wasn’t a key cog in the effort to bring WiMax to market.

Simply put, one of WiMax’s biggest champions is limping along so badly (Techmeme) that you have to wonder if the company can help push services mainstream. Let’s face it: Motorola (MOT), Intel (INTC) and Samsung can push WiMax all they want and even throw billions behind the effort, but you need a carrier to hook people up. And the key carrier in this equation – Sprint – is gimpy to say the least.

Sprint lost $29.5 billion, or $10.36 a share, in the fourth quarter reversing a profit a year ago by a country mile. Revenue for the quarter was $40.1 billion compared to $41 billion a year ago. Churn is 2.3 percent and the company’s results “reflect the challenges facing our wireless business,” said Sprint. In addition, Sprint is the weak sister in an ugly price war launched by AT&T and Verizon Wireless. Sprint counted on Thursday with a $99.99 a month plan that offers unlimited voice, data, text, email, Web and other parts of the kitchen sink.

In a nutshell, Sprint is in trouble. Enter WiMax. Sprint has big plans for WiMax and hopes to use the newfangled high-speed wireless technology to leap frog other carriers. On paper, Sprint’s plan to open up WiMax, launch and SDK and open APIs sounds great, but it’s not clear that the wireless has the financial heft to deliver on its plan.

What’s next? Intel and Google and other WiMax proponents better give Sprint some sort of financial life support. If these technology titans don’t step up to help Sprint there will be a lot of WiMax technology out there with no carrier to provide service.

Comments

[Nextel Acce...:]

This technology is amazing, lets hope Sprint can work this out.

2008 Feb 29 08:42 AM

[User 157527:]

It's a shame! I was looking forward to WiMax realiztion for a while. The NEXT thing is sorely missing in wireless market IMO, and WiMax could open market to many new subscribers. What is a probability of massive investment into Sprint by Intel or Google?

2008 Feb 29 11:07 AM

[vitaminc:]

It's ridiculous when people takes on a US centric view on WiMax deployment...

2008 Feb 29 06:48 PM

[Alphafan:]

WIMAX is a great technology with lots of potential. Too bad that the weakest of the wireless companies took on the task of carrier. Strategically, Intel, Samsung and Motorola will lose big if Sprint falters. Intel Google, shud step in to help. Sprint is a cheap play ($20B current market cap) It can merge with Clearwire another WIMAX champion. It can be saved if some visionaries with guts could step in (Steve Jobs like person) I have only seen from the new CEO only typical run-of-the-mill CEO-like actions (layoff, cuts, bean-counting fixes, etc) He hasn't communicated any vision for the future of the company. If the current Sprint leadership can't figure out by now what to do, then no one shud have faith in the viability of the company and it's current management, that's why this stock remains a SELL...

2008 Feb 29 09:13 PM

[whidbey:]

Clearwire could be important. The principals at CW have been aggressive in the past in new technology and they can raise money, however, with carriers engaged in starve out, who would want to enter and invest heavily? MSFT would likely not want in for a host of reasons, but its financial capacity and needs would suggest this is a better acquisition than YHOO. Stevo is looking for ad revenues, not services.

2008 Mar 01 04:06 PM

[wysiwyg:]

Don't count Xohm as down and out. The commitment to the WiMAX network is still moving forward, as are the deliverables for this business unit. The new CEO is clearly in an assessment and team structuring mode, and has already made some decisions which are market changing.

2008 Mar 03 05:14 PM

[Geddy:]

Lord, I hope they don't count on Clearwire to save them. Talking about a company operating the "MacGyver" way!

2008 Apr 02 01:18 PM