Clearwire IPO Take Two

from the play-it-again-Craig dept

Earlier this summer, WiMAX operator Clearwire filed and then quickly withdrew plans for an IPO, after Intel bestowed the company with a whopping $600 million investment, and Motorola bought its equipment unit for $300 million, ensuring that one of the biggest proponents of the technology would have all the cash it needs, free from public market scrutiny. Apparently that $900 million wasn't actually enough to tide the company over, as it's now re-submitted plans to go public, to raise another $400 million. It's quite a testament to the massive capex requirements for this company, that it needs to tap the public markets so soon after such a large infusion of cash. And it's worth noting that the amount the company expects to take in from the public is much less than it's received in the private market, confirming perhaps that its investors (primarily Intel) have given the company so much money, not because they anyone thinks it's a good investment, because they just want it to succeed. And yet, things don't look a whole lot better for the company. According to the S-1, the company's subscriber growth isn't particularly impressive, given how small its base is, along with all of the money (and hype) it's received. Since the start of the year, it's added about 130,000 subscribers, bringing the total to 188,000. And after bleeding away $200 million in the first nine months of the year, the company still has no timeline for profitability. The one factor working in its favor is the overall market. The stock market was weak this summer, and the offering might have been associated with Vonage's botched IPO. Now, with the market at record highs, and a slew of successful offerings of late, it should at least benefit from better conditions.


Reader Comments (rss)

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  1.  
    identicon
    alaric, Dec 19th, 2006 @ 10:25am

    Sticking up for Clearwire

    Their model up until now is largely fixed dependent because their coverage is really not that good. If they in fact make a go for mobility then you can not use previous performance as a metric for the success of moblity. I personally do not believe that mobile wimax will be ready for mobility until 2009 and i sincerely doubt that anyone is going to bankroll build out of yet another major mobile network. Likewise, i sincerely doubt WiMAX will have any advantage whatsoever over HSDPA/HSUPA, EVDO REV A but i thought i should mention this. Clearwire is really a model for WiMAX problems. Major carriers will not use it (I'll believe sprint when i see their wimax network and until then i'll just assume sprint/wimax = distraction/stalling mechanism). "New" carriers lack the funds to build the coverage they need to compete with existing mobile operators and deploying wimax offers dubious advantages over other choices. Sorry intel, hype is great for selling pentiums to consumers who know very little about tech but RF network engineers with PHds are generally a more difficult nut to crack. Unsubstantiated claims no good. Investors think and test hard and long before spending billions on new newtorks. My 2007 prediction: "sprint drops WiMAX and begs FCC for deadline extension."

     

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  2.  
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    Anonymous Coward, Dec 19th, 2006 @ 10:48am

    Hitting the capital markets so soon after a huge cash infusion shows how fast the executives of a company without a viable business were able to move huge amounts of money offshore...

     

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  3.  
    identicon
    Anonymous Coward, Dec 19th, 2006 @ 12:21pm

    I believe Clearwire's "viable business" was justified by Sprints announcement following the intel/motorola infusion that it was going to spend 3 billion to build out a competing network using the WIMAX technology. if you follow the name, you will not they have only rolled out in very few markets, have yet to retail the scaled down version of the modem(still using the clunky pre-motorola equipment) and have yet to even make a big marketing splash. I am hoping it comes to my area as broadband is horrible and this gives me the an opportunity to get internet at speeds where you people in densely populated areas take for granted. looking forward to a full rollout of WIMAX...

     

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  4.  
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    Jim Harper, Dec 19th, 2006 @ 12:23pm

    Proving . . . what?

    I don't know that a large need for capital tells you anything one wouldn't already know about what it takes to build a broadband platform - and it neither signals that it's going well nor that it's going poorly. Subscriber numbers, maybe, but "too soon to tell" would be the most accurate, if uninteresting, conclusion.

     

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  5.  
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    DG Lewis, Dec 19th, 2006 @ 12:26pm

    NextNet

    Actually, Moto bought Clearwire's equipment unit (NextNet Wireless) for $50M, bought 50M shares of Clearwire stock for $300M, and got a five-year exclusive-purchase agreement on network equipment and a two-year $150M purchase commitment in the deal.

    Not too shabby... for Moto.

     

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  6.  
    identicon
    Stephen, Dec 19th, 2006 @ 12:44pm

    Clearwire is a wireless ISP?

     

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  7.  
    identicon
    Robin, Dec 25th, 2006 @ 7:35am

    subscriber numbers

    The low subscriber numbers might have less to do with the
    limited markets and more to do with the limited service and
    poor tech support. I can only get a signal from one spot in
    my house and the window has to be open. That's not too
    great in Florida during a sweltering summer. And, even when I have a great signal, if there is a lot of traffic, there's
    no way I'm getting on. I've had Sundays when I couldn't
    get on for five hours. My first call to the local office was
    returned five days later. My second call was never returned.

     

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  8.  
    identicon
    Clearwire Fan, Dec 27th, 2006 @ 10:01pm

    Re: subscriber numbers

    Try Clearplugs. They increase the signal from one area of the house to another through your existing electric circuits. As far as you window being open to get a good signal, you may be misunderstanding that a direct line of site to the base station is not always the way to get the best signal. Try areas in your home that you would least suspect; you might be surprised...(in a closet, a windowless corner etc.).

     

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  9.  
    identicon
    Anonymous Coward, Feb 11th, 2007 @ 2:48pm

    Clearwire going public

    Does anyone have an idea when Clearwire will be going public?

     

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  10.  
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    Anonymous Coward, Feb 15th, 2007 @ 3:32pm

    Re:

    Idiot.

     

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  11.  
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    Beverly, Feb 16th, 2007 @ 8:52am

    I see a growth company!

    When they do go public, I'm buying stock!!!!! And so is everyone in this room!!

     

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  12.  
    identicon
    Sam, Feb 16th, 2007 @ 8:05pm

    why is IPO total so low?

    Why is the IPO total so low considering that almost $1B has already been raised by Clearwire? The market cap will be lower than what has already been raised pre-IPO.

     

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  13.  
    identicon
    Sam, Feb 16th, 2007 @ 8:06pm

    why is IPO total so low?

    Why is the IPO total so low considering that almost $1B has already been raised by Clearwire? The market cap will be lower than what has already been raised pre-IPO.

     

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  14.  
    identicon
    Shannon, Feb 16th, 2007 @ 8:19pm

    Kite Networks is another IPO that is coming

    Mobilepro Corp. (MOBL) has announced they are spinning off Kite Networks which has WiFi deployments in Tempe, Yuma and Chandler, AZ and Framers Branch, TX along with many other cities under contract. They say their WiFi can be changed over to WIMAX with a simple card change in their equipment. Kite already has call centers setup. Have no idea what the IPO value of Kite will be but if this technology becomes popular it seems that Kite would be an excellent investment for the future or for them to be acquired. BB&T Capital Markets is handling the IPO.

     

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  15.  
    identicon
    Donaldo, Feb 17th, 2007 @ 10:50am

    Clearwire IPO hype

    It seems that Clearwire is playing the marketing hype card pretty early for a fairly modest offering of 20M shares. My guess is that this is just the first salvo of several. History is a great teacher if you are willing to look. This is IPO 101 and Clearwire is positioning itself for a long run. If you want to get into line it would seem that a Morgan Stanley or Merrill Lynch association would put you there. IPOhome.com is a source to follow also.

     

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  16.  
    identicon
    Fladnag, Feb 18th, 2007 @ 8:36am

    who is underwriting clearwire ipo

    Does anyoneknow who is underwriting Clearwire IPO???

     

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  17.  
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    dclay, Feb 20th, 2007 @ 2:30pm

    Re: who is underwriting clearwire ipo

    I assume that it is Merrill Lynch, I plan on calling them since I don't have an account

     

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  18.  
    identicon
    donaldo, Feb 21st, 2007 @ 4:12pm

    Date of IPO listing

    BusinessWeek internet announced about 6:00 EDST that Clearwire's IPO would be listed on Monday, March 5 on the Nasdaq. The expected starting peg will be 23-25/share. There is lots of interest: http://www.businessweek.com/ap/financialnews/D8NECBT80.htm

     

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  19.  
    identicon
    ex-clearwire employee, Feb 27th, 2007 @ 10:42am

    Re: don't get you hopes up.

    for all you folks that are hoping Clearwire comes to your neck of the woods so you can get high speed Internet in Rural Markets think again.
    Clearwire is not targeting Rural Markets (althought they say they are) They do not have ANY footprint in rural markets at this time and have no plans to. They are targeting exisiting highly dense populated areas just like cable and DSL. They think they can pull a large chunk off the market share away from the competition. Tough nut to crack if you ask me especially considering most of their customers are coming from dial-up. Also their churn rate is not being reported accurately. because they are not a public company they go by different rules. They can basically say whatever they want. Clearwire does NOT count churn (deactived customers) if:
    The return is made in the first 180 days
    If the return is made because the customer moved
    If the return is made because the service is not working properly
    If the customer retuens modem due to lack of coverage.
    ALL of these reasons are counted as "Pull-Backs" within the organization and not counted as true churn numbers. That's why they can get away with saying their churn is below 2%.
    If everyone was allowed to do that churn would be eliminated on the books altogether. This is exactly whay Charter was charged with a few years ago. Maybe that part of the reson Clearwire is scared ro go public. Then investors get to look at the REAL numbers.

     

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  20.  
    identicon
    Richard, Feb 27th, 2007 @ 12:10pm

    Re: I see a growth company!

    Was I in the room at the time? Or should I just plan on buying stock from you as you corner the market.

    Seriously, Craig McCaw has played this game before and won bigtime. ClearWire (WiMax) is definitely a disruptive technology. The IPO and cash infusions are just the beginning of their needs. A National or Multinational buildout will take billions. The major cell-phone companies have mutli-billion dollar network buildout budgets annually. I expect that here as well.

     

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  21.  
    identicon
    John, Mar 4th, 2007 @ 9:28pm

    clearwire = not so clear

    I can honestly say I have nothing good to say about my service from Clearwire. My speed is about 1/2 of advertised, my latency is around 400-500 ms on a good day, and the tech support is really bad. Really, its a great idea, but the company has a lot of work to get it up to their claims. I've chronicled my experience if anyone would like to see what its really like to have these guys as an ISP.

     

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  22.  
    identicon
    Anonymous Coward, Mar 5th, 2007 @ 5:44pm

    NextWave

    You may want to check out another WiMax company which went public recently - NextWave (WAVE). They dont look to be positioning themselves as a provider, but instead develop the chips for WiMax. They are lead by another telecom pioneer, Alan Salmasi, who was one of the key members of the Qualcomm executive team as they exploded into the company they are today.

     

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  23.  
    identicon
    Jeff, Mar 7th, 2007 @ 9:30am

    Call me at Merrill Lynch

    1-800-937-0788 or 1-732-632-5869

     

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  24.  
    identicon
    Jeff, Mar 7th, 2007 @ 9:32am

    Re: Call me at Merrill Lynch ext. 5869

    1-800-632-5869 ext.5869 or directly at 1-732-632-5869

     

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  25.  
    identicon
    Current Clearwire Employee, Apr 4th, 2007 @ 8:17pm

    I will telleveryone firts-hand. I am one of the original employees hired in a ver viable market. You are soon to see many drastic changes at clearwire. Some of the public things you will see will "appear" good. Look at the underlying detrimental and permanent affects to their employees...ie: real people. It's bad.I have done very well up until recently. And you will see this repeated all over the country. Those who have built local markets are being sucked dry and discarded. Treated so badly. This in order to get their ...never mind. Look into it. Do you really want this kind of company coming to your town and doing these things to you Mom, brother, child? Look ahead, there are better technologies coming. Just sit tight and see.

     

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  26.  
    identicon
    Todd Boyle, Apr 4th, 2007 @ 9:33pm

    Clearwire Boycott

    Craig McCaw lives in a 12,200-square-foot house once owned by musician Kenny G in Hunts Point, on the shore of Lake Washington, where neighbors include the Gateses. The McCaws hosted President George W. Bush for a re-election fund-raiser. Over the years, McCaw has owned a yacht called Cellular One, a Gulfstream IV jet, a Falcon 50 jet and a Beaver seaplane.... ---BLOOMBERG http://www.bloomberg.com/apps/news?pid=nifea&sid=aNtp2bS8WFmo

    Since 2003, three of the president's four fund-raising trips to Washington have taken him to Medina, where he has collected $4.5 million for the Republicans. A Craig McCaw–hosted event raised $1.7 million of that. The grateful president in turn last year appointed Craig McCaw's second wife, Susan, a venture capitalist, as U.S. ambassador to Austria. ---SEATTLE WEEKLY http://www.seattleweekly.com/news/0633/playhouse.php

    http://www.google.com/search?q=clearwire+mccaw+bush+hunts+point

    Here is what it looked like in 2004 when Bush came to Hunt's Point. Many of you stood with me, including OKelly, Gary, Jack and Jack, and many others. http://www.epjc.net/op/StopBush.htm

    Clearwire is an evil company. McCaw supports the Republican Party in order to gain business advantage, regulatory favors, provisions and earmarks in the Congress.

    DON'T BE FOOLED -- warn all your friends, this is not a good company to switch your Internet service to. As long as McCaw is involved, regard this as a completely as equivalent to Bush and Cheney, on their ethics and style of doing business. Consider this like ENRON, for example.

    An internet provider has many, many ethical choices involving your privacy, your quality of service, and your freedom and liberty. Would you trust Bush to provide net neutrality? Would you trust Bush and Cheney not to delay your email, or block progressive bloggers during elections or wars or invasions? Well then, you shouldn't trust Clearwire.
    I feel Clearwire a direct threat to our civil liberties. They *are* the Republican Party. It is like FOX News. FOX News *is* the Republican Party. It doesn't just report a Republican slant. Their behavior is conscious and strategic to promote the interests of Republicans.

    Again look at the 84th st bridge into Hunts Point in front of Craig McCaw's house http://www.epjc.net/op/StopBush.htm McCaw organized this whole thing, shook the tree, got all the Repubs to pay $1.7 million to Bush-- this was AFTER the invasion of Iraq. AFTER the war was proven to be a fraud.

    An Internet ISP makes so many choices, behind the scenes, that affect your connectivity. It is impossible to regulate these many detailed decisions. Will they snoop your data? or allow their corporate pals to snoop? Will they censor or block? Will they extort fees?

     

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  27.  
    identicon
    Banks Armstrong, Apr 11th, 2007 @ 4:25pm

    IPO Clearwire eeeeK!!!

    This company is a poison pill. The infusion of money was blackmail through suppliers whose customers don't want their markets upset. These are mainly DSL providers and some cable companies. So they all got together and had their chip suppliers pay homage so Clearwire would re-define itself.

    Now that it has, you will see their technology will be sold off next. The product is a good one but not a good substitute for true DSL. Why they call it mobile broadband is strange as it should be Mobilr BB DSL.

    So, everyone expecting it to work like cable BB are unhappy and those who know what how bad DSL is are really disappointed.

    Would I buy the stock? Perhaps after the IPO and it slides in to the pink sheets. I would buy a long term put option to sell at the IPO price. This stock will have a 2 year life span. It takes that long of peak and valley trading as the intial offerors slowly pump and dump their shares and distance themselves from the specialists.

    I believe the only real alternative to cable is satellite but the Clearview product would have been a great batery operated one so you never would need a credit card in a hot spot again.

    And that, alas, is the future of Clearwire. Everyone with a briefcase will have one, a generic and this company will never catch their own wave.

    If only that had been truthful and learned something about rechargeable batteries!!!!!

     

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  28.  
    identicon
    Dirtywire, Apr 24th, 2007 @ 10:28am

    Re: Re: don't get you hopes up.

    That's exactly right. Someone is cooking the book. By using pull back to increase the subscribers base and decrease the churn rate, and then used the inoccrect avrage base to dulitive the churn rate. You think their churn rate will be under industry level?!

     

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  29.  
    identicon
    mike king, Jan 3rd, 2008 @ 5:15pm

    IPO

    When I looked it up on the interne,I got the impression
    interl had loaned then a large sum and motorola had
    something to do with it. I dunno. anyone who is involved wih
    the gang of 4 is going to get burned. Everything smells
    that they touched. Mr. brain damaged what me worry? is
    banking millions...there is about 7 bllion cash missing in
    Iraq. The uditors report will never see the light of day,
    just like they covered their ass and destroyed the torture photos. The democrats ae every bit as bad...The supreme court is a rubber stamp for our man. The republicans arent really worried. They are controlling the congress, supreme court, and just in case something slips by, they also control the money and the lobby, so it's all a big hand job,
    There will be a lot of talk and nothing more. The republicans want their precious tax cuts for the rich, subsidies, for the rich..of course....more gashog, oil burning goliaths on the highways, big business will lobby
    and get the right to pollute, and now the emphasis goes from smoking to food being the cause of all the problems.
    the poor dont have spAS, and evian water, special food flown in that is low on calories, they eat macaroni helper, with fake cheese and federally mandated corn syrup to help the farmers and F...K the poor. Everything is their fault.
    The fix is still in on the war, lets see the enemy is US!!
    We need more wiretaps,and jails and listening devices, and
    spies in the neighborhood, never mind old Ben, he's a friend of the family who was in BUSINESS WITH OLD MAN bUSH,, bin laden was a ladies man, into drgs and alcohol and he lived in Beverly Hills. tHE SAME DAY of the bombings the family of the ringleader, bin laden were esorted safely out of the US. The war is a ploy to put trillions into the mideast. Just a few weeks before the planes going into WTC,
    the owner of the buildings upped the insurance on the buildings and made a profit of 150 million dollars. They blamed the fire for bringing down the buildings, only flames dont burn that hot. Many profited on the stockmarket
    before the planes went in, but they say they cant check on who...thats nice, Im a teeny little trader and they know to the penney every trade I make, I guess its just the little guy who has to report. Read the Esquire magazine report. It will blow your socks off.

     

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