Clearwire, which is working with Sprint Nextel to build a high-speed Internet network, reported a wider first-quarter loss after efforts...
Clearwire, which is working with Sprint Nextel to build a high-speed Internet network, reported a wider first-quarter loss after efforts to broaden its coverage increased costs.
The net loss grew to $176.4 million, or $1.08 a share, from $92.6 million, or 64 cents, a year earlier, the Kirkland company said Monday. Analysts had estimated a loss of $1.02 a share, according to a Bloomberg survey.
Sales climbed 76 percent to $51.5 million, higher than analysts’ estimate of $48.6 million. Clearwire added more than 48,000 subscribers in the period, reaching a total of 443,000.
Clearwire stock fell $1.35, or 9.6 percent, to $12.75 in regular trading Monday. After the market closed and the company reported its results, the shares gained 25 cents to $13 in extended trading.
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The stock has fallen 48 percent since its initial public offering in March 2007.
“The operational results were pretty solid in the quarter,” said Michael Nelson, an analyst at Stanford Group in New York. “The overhang on the stock is that there’s still skepticism on the technology and the business model.”
Clearwire, founded by mobile-phone pioneer Craig McCaw in 2003, is building a wireless network to challenge services provided by cable and phone providers.
It said last week it will combine its operations with a Sprint unit, a project that will get $3.2 billion in investments from Intel, Google, Comcast and Time Warner Cable.
“What’s really important for them is to get the additional capital and be able to build out new markets and fund this whole vision they have,” said Steve Clement, an analyst at Pacific Crest Securities in Portland.
He expects the stock to perform in line with its peers. “The company isn’t that focused on its operations right now. Management has been really tied up on how to put this deal together,” Clement said.
Sprint also reported its financial results Monday, saying it had lost more than a million customers last quarter and may sell some assets after its net loss swelled to $505 million.
The first-quarter net loss expanded to 18 cents a share, from $211 million, or 7 cents, a year ago, Overland Park, Kan.-based Sprint said.
Sales fell 7.5 percent to $9.33 billion, compared with the $9.39 billion average estimate of analysts in a Bloomberg survey. Analysts predicted a first-quarter loss of 15 cents a share, or a profit of 2 cents excluding costs from items such as job cuts.
Sprint lost 1.07 million contract customers last quarter, fewer than forecast, and said the declines will improve “marginally” this quarter. Customers have fled over complaints about service after the $36 billion acquisition of Nextel Communications in 2005.
“The first quarter was ugly, but that was also expected,” said analyst William Power of Robert W. Baird & Co. in Dallas. “Hopefully, the first quarter is the low-watermark point in terms of subscriber growth.”
Sprint affiliate sues over Clearwire deal
KANSAS CITY, Mo. — An affiliate of Sprint Nextel, iPCS, said Monday it wants to block Sprint from forming a wireless broadband company with Clearwire.
Schaumburg, Ill.-based iPCS, with 640,600 subscribers in seven states, said three of its subsidiaries sued in Cook County Circuit Court in Illinois, alleging the service would compete with iPCS within its markets and therefore violates an exclusivity pact Sprint signed in 1999.
Earlier this year, an Illinois appellate court upheld a lower-court ruling that found Sprint’s 2005 purchase of Nextel Communications violated its exclusivity agreement with iPCS. The court ordered Sprint to divest itself of all Nextel assets in iPCS’ territory. Sprint is appealing.
Sprint has asked a Delaware Chancery Court to rule the Clearwire transaction doesn’t violate the exclusivity arrangement with iPCS.
“Because of our ongoing disputes with iPCS, we felt compelled to seek declaratory judgment that Sprint’s affiliate agreement with iPCS in no way prevents the operation of the new Clearwire in iPCS’ territory,” said Sprint spokesman Matt Sullivan. “This latest action by iPCS is simply a response to our request to the court.”
The Associated Press