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  • Clearwire's Future Is Not So Clear [View article]
    Hmmh, as DISH just spent only a couple of billions to get some discarded spectrum, it should go ahead and spend $40B-$50B to buy Sprint and CLWR too just to make good on its initial investment.

    Yup, that's it, if you make the discarded beef innards used for pet food feedstock, let's buy a pet food company, and along with it, we can buy a kennel with lots of dogs, and some pet salons too so that we can make good of our beef innards...yeah, that's the idea.
    Jun 22 01:26 PM | Likes Like |Link to Comment
  • Oracle (ORCL) has agreed to a $0 settlement for statutory damages related to its patent infringement suit against Google (GOOG). However, it's also filing a partial over the case. In May, a jury declared Google innocent of all 8 patent infringement claims levied by Oracle, and a judge subsequently denied Oracle's request to nullify the jury's decision. Oracle once sought billions in damages from Google over Android's use of Java programming interfaces.  [View news story]
    This is an inaccurate, or somewhat perfunctory, characterization... ORCL and GOOG did not settle. ORCL is proceeding to appeal Alsop's ruling in the case.

    The parties simply agreed that the statutory damages for the copyright violation on the code that was found was of little consequence to argue over. The larger issue is whether Judge Alsops's finding of non-copyrightability of the 37 API's (which the jury found GOOG violated but no final decision was made with respect to "fair use") is upheld upon appeal. If Alsop is overturned on the API issue, then whether GOOG could rely upon "fair use" exemption still needs to be adjudicated (currently moot).

    See teh reference quoted in the agreed-upon stipulation: "For the avoidance of doubt, the parties reaffirm that paragraph 2 of the prior stipulation shall govern in the event that the SSO Claim or any portion thereof is ultimately submitted to a trier-of-fact for an assessment and award of monetary relief."

    This case is far from over...

    Florian Mueller, albeit an Oracle advocate, has the following take which is a more insightful assessment of where things stand in terms of legal tactics from both parties in this case:
    Jun 21 11:13 AM | 2 Likes Like |Link to Comment
  • Shares of RealD (RLD +7.3%) shoot up with early reviews from Europe on Sony's (SNE +1.1%) The Amazing Spider-Man (trailer) largely favorable on the movie and the integration of RealD technology. [View news story]
    ....and IMAX will benefit too given Spidy's 2 1/2 week run on IMAX (including July 4th holiday) leading up to the euphoria of The Dark Knight Rises' global release on July 20th (only 2-D since Chris Nolan thinks 3-D is distraction -- sorry RLD). Pretty soon we'll run out of comic books to make movies from. Then what is Hollywood going to do?
    Jun 19 03:13 PM | Likes Like |Link to Comment
  • Clearwire's Future Is Not So Clear [View article]
    Because AT&T is one of those existing facilities-based carriers that has nationwide 60K cell site network that would benefit from high frequency spectrum for use in "hot spots" on its network to "off-load" traffic. I did not say CLWR's spectrum is only usable for what you call "back haul" (whihc employs high-powered point-to-point digital microwave) -- it's actually not, or rather, it would be a waste of CLWR's spectrum to use it for backhaul becasue as opposed to other 2ghz micowave specturm that are only licensed point-to-point, the BRS spectrum that CLWR has are actually licensed for re-use within a geogrpahic area, and so are well-suited for two-way broadband, which is infinitely higher value in use than digital microwave applications.

    CLWR's spectrum is simply not very good for use to build a de novo wireless broadband network as it does not penetrate well in urban settings and it does not propagate well in the suburbs. Someone like AT&T with an existing 850mhz GSM/HSPA+ network and 700 mhz LTE network overlay could supplement with 2ghz spectrum overlay (or use AWS 1.7ghz/2.1ghz spectrum except that AT&T had to give that up as break-up fee to TMUSA in the pre-nup arrangement for canceled wedding) in the most heavily congested cell sites. This would allow AT&T (or any of the other major netowr carriers) to, over time, have handsets and devices that are biased to hunt in the 2 ghz frequencies first in search of hot spot coverage, and then shifting to lower frequencies when it can't find a strong 2ghz signal. This way in areas of the footprint where 2ghz frequencies provide strong hot spot coverage, the traffic will be off-loaded to the 2ghz frequencies first, while the lower band offers deeper in-building and broader coverage footprint.

    AT&T working with SIRI simply proves the point that it prefers collaborating with a strategic independent entity rather than with a compromised CLWR, given CLWR's affiliation with Sprint (and presumed "poison pill" that limits its attractiveness with other majors who may be loathe to depend upon entity 50% owned by Sprint).
    Jun 19 02:59 PM | Likes Like |Link to Comment
  • Clearwire's Future Is Not So Clear [View article]
    Delian, CLWR was never "spun off" from Sprint. Clearwire was independent company sponsored by Craig McCaw and it was going around buying up (actually leasing mostly) the 2.5ghz spectrum that Sprint didn't own (Sprint had previously amassed the largest position of this spectrum band when it merged with Nextel which previosuly had done end-run around Sprint and picked up its block of 2.5ghz spectrum on the two coasts from MCI's bankruptcy). Because Sprint and CLWR were on a death march of mutual assured destruction to build duplicative networks on top of each other (Sprint's Xohm services -- yes, finally mercy killing of the ridiculous name after the merger with CLWR), this ultimately culminated in a multi-party deal where Sprint contributed its far superior spectrum position, along with monies from GOOG, INTC, and the cable mafia/consortium, into CLWR where Sprint ended up with 51% equity position in CLWR, with a plan to migrate from CLWR's pre-WiMax network to a WiMax network that would anchor the 4G wireless broadband platform of not only Sprint but also the cable partners as well, and presumably some future undefined play for Google.

    Unfortunately, Clearwire's spectrum position, because of its poor radio propagation characteristics and lousy in-building penetration is largely useless to build a de novo network and it is also uneconomic as it will require between 7x-10x the cell sites to compete with the 700mhz spectrum that Verizon and AT&T are implementing their LTE at. See the FCC report on ATT/TMUSA merger and difficulty for high frequency spectrum to provide competitive coverage cost-effectively ( So as a means for new entrant such as Google etc. identified in the article to build a new network, CLWR's spectrum is neither practical nor feasible -- even Google isn't that dumb (arrogant, unethical and unlawful yes, but not dumb) and in fact Google and Intel have both sold down their CLWR equity positions.

    CLWR's spectrum is fundamentally, due to its RF characteristics, only valuable as a load shaving application and its current deal with Sprint and Leap is finally to provide such "hot spot" service. What that means is that it is dependent upon, and only has economic utility to, an exisitng facilities-based carrier that has already (or plans to) deployed wide-scale network that can otherwise provide cost-efficient coverage and in-building penetration to provide competitively adequate service level. CLWR's greatest value is thus to dole out its spectrum in 20mhz - 40 mhz contiguous swaths, which arguably, depsite its statement of controlling an average of 160mhz in each market, not all of this spectrum is contiguous (so misleading for them to boast those figures), so it may only have a limited 2-3 carriers of usable wideband contiguous spectrum in each market. Alternatively, CLWR could posit itself as the industry's carriers' carrier to be the GB factory for all in order to aggregate economic scale to benefit all the majors, but Sprint's strategic blocking position in CLWR's equity ownership and negative control probably inhibits the willingness of other major carriers from entertaining such a concept.

    Thus, CLWR remains trapped in this conundrum, with no chipsets or handsets that can accomodate its TD-LTE flavor of LTE technology in volume until at least mid 2013, and in the meantime, interest service on its debt alone burning up nearly $600 million a year in cash. Frankly its levered balance sheet and cap structure is killing CLWR. The only way for CLWR to realize its underlying potential is a filing or some form of elective restructuring to cleanse its balance sheet, or alternatively, it has a brief window to sell off 40 mhz of its best spectrum in order to delever and to fund what remains into a viable sustainable business. Only time will tell whether CLWR can thread the needle to viability/prosperity given the very limited liquidity runway (12 months) that remains before it runs out of money.
    Jun 19 12:22 PM | 2 Likes Like |Link to Comment
  • Pandora (P -6.9%) trades lower after BTIG's Richard Greenfield, who has long maintained a bearish stance on the company, expresses concerns about the growing popularity of Songza, a mobile app that streams music from playlists "organized by activity, genre, decade, mood, and culture." A solid majority of Pandora streaming now takes place via mobile devices.  [View news story]
    but all these different forms of "free", I am largey paying with my attention span --as they all try to monetize my listenership somehow, mostly via audio ads. it's just that pandora the ad frequency nowhere near what typical terrestrial radio is. even on sirius XM, many stations (particularly talk) have ad content as well. i find that pandora, depending upon how you define the "station" can be repetitive, but so is a top 40 radio station, and Sirius XM may curate it for me with more robust selection, it still ends up to what is the value proposition of whether I am getting value for the price I am paying. I actually find the comedy channels (although sometimes it is not appopriate with kids or guest in the car) and the sports (such as NFL or MLB) as pretty valuable which difficult for me to find/duplicate from elsewhere -- at least in a car, that is.

    But I agree with you (I think) that a subscription-based service, particularly as Pandora, Spotify, and iTunes with Apple's "Siri" attack the dashboard of a car with automatic integration/interconne... it's going to pressure SIRI the company... Just my opinon.

    BTW, the real epiphany for me is how well 3G/4G coverage has evolved, which coupled with some improvements in buffering capability at the receiver device level, can result in a pretty deccent level of service from streaming services.
    Jun 15 03:15 PM | Likes Like |Link to Comment
  • Behind Sprint's Recent Outperformance [View article]
    good if Abe you can get your facts straight. recent $2B bond financing were at 7% and 9.125% and both bonds are trading above par, meaning the yields are lower today, and thus any new issuance would be at lower rates. the undrawn credit facility caps out at L+400bps (that's 4.2% currently whre LIBOR is to help with the math) so that could be drawn to pay off-all the remaining maturities through 2013, except that makes little sense since the IPCS floating bond that matures in 2013 is at rate of L+212.5, or around 2.35% currently. more importantly, the remaining $1.6 maturities that remain for late 2013 and 2014 are Nextel bonds whose coupons are 6 7/8% and 5.95%, so replacing with vendor financing (just like what Sprint just did, $1B of vendor debt matched with $1B of prepayment of a late 2013 maturing bond) will actually be cash flow accretive, and certainly not the additional "$330M+/yr" as if current debt doesn't cost anything.

    Lastly, new vendor financing facility probably should be lower priced at lower spread than Sprint's credit facility since they are pari pasu and certainly no worse because OEM vendors have provided credit wrap (in exchange for them enjoying their gross profit dollars on the network vision project). so I dont know where you pulled your estimate of "north of 11% interest" from, but it wasn't based in market reality, or any familiarity with current market conditions.

    And yes basic tenet of corporate finance, notwithstanding your point of view, is such that one should explore vendor financing as it often represents an appropriate and attractive form of subsidized financing, since in essence the OEM vendors use their gross margin dollars to either buy-down the price or otherwise credit enhance the credit facility. Why do you suppose that if you finance you nice new car with the automaker's own captive finance co, you often get better financing rates than from financing with your local bank. So I dont particularly understand why you would criticize the company for taking measures to diversify its sources of liquidity and credit capital -- that's what any non brain-dead CFO should be doing to seek the lowest form of capital and to maintain diversified sources.

    anyway, I too look forward to signing off this post as well since it gets tiresome to try to be helpful to someone who just cant seem to get facts straight and only wants to believe what serves his own perspective. one last point, Moffat (bernstein) is a true mullat; when you start listening to an equity research analyst attempting to calculate implied default risk from CDS pricing, you might as well ask him about your horoscope or his predictions from the mayan calendar, because he is more likely to get those right before his feeble attempt at credit analysis (I'm sure that he can do brain surgery and fix your computer on weekends too).
    Jun 15 11:10 AM | 3 Likes Like |Link to Comment
  • Behind Sprint's Recent Outperformance [View article]
    hey Abe, iPhone 4S are "4G" on AT&T (at least what AT&T advertises as "4G" and users know no better than what is told to them) since iPhone 4S uses the HSPA+ network and they even light up the "4G" icon on the IPhone's network bar when running on AT&T's HSPA+ network.

    see the "4G" branding that AT&T is promoting:

    So the fact of the matter is that Verizon and Sprint are each competing with their so-called "3G" EV-DO networks with the iPhone 4 and 4S against AT&T's "4G" HSPA+ network on the iPhone 4S. So Apple already released and has been shipping a "4G" iPhone,...since October 7, 2011 on AT&T.
    Jun 14 07:09 PM | Likes Like |Link to Comment
  • A Proposed New REIT That Promises To Pay Iron Mountain Dividends [View article]
    presumably that's an issue that professional advisers dealt with and are comfortable to advise going forward with applying for the PLR, but it does represent some execuiton risk clearly. but how are the bins and metal cages of public storage REITS that are counted as "leasehold improvements", or the tower infrastructure that sits on concrete pads that AMT (a tower REIT) includes in its REIT assets, not dissimilar in fitting the "leasehold improvement" category of real estate test. they are all "permanent".fixtures that enhance the purpose of tenancy and improvements that help the landlord to realize rental income.

    Plan B is to stay levered, and become a c-corp dividend machine and hope that congress keeps the qualfiied dividend exemption (i.e. 15% tax rate on c-corp dividends that have already been subject to corporate level tax) supplemented by periodic stock buy-backs to stay levered.
    Jun 14 04:21 PM | Likes Like |Link to Comment
  • Behind Sprint's Recent Outperformance [View article]
    Abe, what debt coming due are you referring to? Sprint just prepaid $1B of bonds that would have matured in late 2013, leaving only $472MM outstanding in that tranche. So other than the $300MM old iPCS bonds in 2013, there are no other substantail maturities until 2014. Why do you believe that poses a problem against Sprint's $8.8 billion of current liquidity, including fully undrawn $1.6 billion revolver and $7.6 billion in standby cash?

    Clearly Sprint is more levered than Verizon, and that creates a more levered investment with respect to owning Sprint's equity and comes with the associated risks of financial leverage, but that doesn't take away from the fact that Sprint is actually awash in plentiful liquidity. One thing that new CFO has done right is to dramatically reduce Sprint's liquidity risk by doing opportunistic financings (even at times with expensive paper) in order to insure plentiful liquidity as it executes its operational turnaround plan.

    It took less than 2 hours for Sprint to do a "drive-by" bond financing to raise $2 billion in bonds, so credit investors seem to have assessed the leverage and see a more benign credit then you do. I would expect the next tranche of vendor financing (3 OEM's, $1B quota from each, two to go) to fully pay off the remainng 2013 maturities and to get a jump on part of the 2014's maturities without impairing current liquidity.

    Each of Verizon and Sprint today are selling the iPhone 4S against AT&T's HSPA+ enabled iPhone which lights the "4G" lite on AT&T's iPhone and it doesnt seem to have materially impaired Verizon's and Sprint's ability to sell against AT&T. IMO you over-state the risk of a "limited" LTE footprint by underestimating the number of LTE pops and the major markets that Sprint will have launched (actually not much different than AT&T's curren tLTE coverage) by the time of the iPhone 5 launch in October.

    However you are correct that the Sprint story entails substantial execution risk -- just not really the ones that you've highlighted, and not clear whether the current stock price of Sprint has not already appropriately discounted those risks (the different perspectives between that of shorts versus longs I guess).
    Jun 14 11:32 AM | 2 Likes Like |Link to Comment
  • Behind Sprint's Recent Outperformance [View article]
    I guess AbeTrader doesn't realize that besides the first 6 LTE markets that are launching in a few weeks, there are 8 more in the on deck circle, including Chicago, San Francisco, Boston, NYC, D.C., Los Angeles, Austin, etc. that will be launched later this year to hit the 120 million pops. I suspect that Sprint will officially announce this next wave of LTE market launches when they officially launch the first batch in June/July. Atlanta already had >150 LTE sites on air last month, and Sprint LTE sightings in Dallas, KC and Houston keep rolling in, and even in northern New Jersey already (now that we have early adopters reporting in from different parts of the country as they are experiencing the occasional 4G "light" on their brand new 4G LTE handsets).

    By the time iPhone 5 launches in October, the Sprint LTE network, while still being rolled out and with limited coverage, will likely have enough critical mass, and enough real-world user experience for Sprint to market the "imminent arrival" message so that at least core Sprint users probably will give them the benefit of the doubt. That may not be enough for "switchers" who value immediate access to LTE capability in the markets where they live, but it would seem that Sprint's value positioning on unlimited will still be a successful differentiation tool particularly given that LTE devices with "HD" screens evidently tend to suck a lot more data (as evidenced early reports of users' experiences with the New iPad).

    Check out the latest Sprint LTE deployment schedule that this guy that runs has been able to compile from his contacts at the threee OEM vendors: . If you are involved with Sprint or interested in any kind of position in its cap structure, you need to keep a close eye on how Network Vision is progressing, and this is must read for doing your due diligence. The NV network overhaul is the driver for Sprint achieving lower network costs, improved network coverage, and an eventual competitive parity or better position on 4G.
    Jun 13 06:20 PM | 1 Like Like |Link to Comment
  • Is Apple Running Out Of Ideas? [View article]
    Very interesting concept... market is very impatient and wants to be wowed yesterday while most tech innovation is "incremental" and "modest", dictated by the pace allowed by component and semi-cnoductor technology and software development cycles.

    You should see the attached precurser to a "tablet" and what we now know of as "Siri", imagined by Apple in 1987, actually by a guy running Apple at the time who used to sell sugar water to children. It took almost 25 years to sort of deliver on that vision. Check out this link:

    We've now got Google imagining people running around wearing nerdy glasses, who knows what Apple has in their own skunk works. What I admire is not the technology so much but the beautiful execution of business strategy.

    Einhorn got it right, it isn't the pace of innovation, but the mind-boggling ability of Apple to extract outlandish margins from its software eco-system, that's why someone would want to own the equity. It's a better business IMO than the business of the drug cartels (for starters, it's legal), because Apple seemingly is no less successful at creating an addictive user experience that keeps its faithful loyal to the brand. And the silly thing is that the utililty enhancement is still largely created by app developers, at least with respect to increasing "economic utility" of the product, whille Apple simply enjoys "pimp" returns by controlling and hosting the distribution platform. Really beautiful business model.
    Jun 12 04:22 PM | 5 Likes Like |Link to Comment
  • Pandora (P -6.9%) trades lower after BTIG's Richard Greenfield, who has long maintained a bearish stance on the company, expresses concerns about the growing popularity of Songza, a mobile app that streams music from playlists "organized by activity, genre, decade, mood, and culture." A solid majority of Pandora streaming now takes place via mobile devices.  [View news story]
    I would actually prefer both, as I can only stream when I am in coverage, while I also have mp3's from my iTunes (converted from Apple format) stored on my Android phone in case I'm in bad coverage area.

    Then again, it may sound strange, but I even will listen to the radio some times in the car because I actually miss the DJ bantering nonsense occasionally, and I can consume that randomly and passively, by simply pushing the up or down button until I "discover" something that I am willing to subject myself to. There is something to be said for pure laziness.
    Jun 12 03:45 PM | Likes Like |Link to Comment
  • Prepaid iPhone Will Boost Sprint/Virgin Mobile And Leap Wireless [View article]
    But maybe, Sprint and CLWR would prefer to continue sucking Leap dry via wholesale revenues and let Leap raise capital to fund the CPGA (and bear the risk of that marketing spend and retention cost). Not clear to me that Sprint is necessarily motivated to buy Leap until it has to -- at that time it buys from the bondholders rather than from Leap's equity holders. Leap's AWS and 700mhz spectrum has little strategic value to Sprint as Sprint doesnt have any of this spectrum anywhere else, and the rest of the 1.9ghz PCS-band spectrum that Leap holds are largely in third tier markets where Sprint will get little strategic benefit. So I agree with the premise that Leap is evolving to a state now where there's at least one party that will eventuallly care (whereas in the past, absolutely nobody cared) but it's still hard to see enough value to out-run the debt, given that its existing customer base and cdma network (and the assoicated tower lease obligations) are really liabilities (i.e. negative value) that impair the strategic value of Leap's spectrum to other parties. No one really needs Leap's distribution strategically - - it's a high cost distributor (with relatively high CPGA for prepaid space) (also that distribution largely disappears the minute Leap is acquired since it overlaps with everyone else's) and the best thing is really for Sprint to keep Leap on life support as an off-balance sheet financed MVNO that Sprint can off-load CPGA and customer retention costs from Sprint's own income statement.
    Jun 12 03:17 PM | Likes Like |Link to Comment
  • Modeling Sprint's iPhone Sales [View article]
    ...and a lot of hope and prayer. Pls note that TD-LTE chipsets (the LTE technology flavor that CLWR is implementing) are unlikely to be available in volume until well into 2013, and CLWR's network plans itself are not until mid 2013. In addition, it's not clear the oft-mentioned China Mobile implementation of same flavor of TD-LTE in the similar frequency band as CLWR is expected any sooner than 2014 at the earliest (since the Minister of Information and Technology has publicly stated unlikely to issue 4G licenses until at least 2014), and thus the hope of a holy grail iPhone 5S or iPhone 6 that can take advantage of CLWR's network is really still a pipe dream...for now.
    Jun 12 11:33 AM | Likes Like |Link to Comment