Clearwire may have recently put up awesome speeds in their LTE testing, but today we've learned that not everything is sunshine and rainbows. The company, which partners with Sprint to provide WiMAX, experienced substantial increases in both subscriber count (1.23 million new customers) and revenue ($147 million) during the third quarter of this year, but will be scaling back on staff, stores, marketing, and handsets. While Clearwire looks for more funding, it will be laying off 15 percent of its workforce, discontinuing network plans beyond what's already in the pipeline, enacting a "substantial" reduction in marketing, and delaying its branded smartphones. Clearwire CEO Bill Morrow said that while the company is "cautiously optimistic" that their short-term funding needs will be met, there are "no assurances." Read a full quote from Morrow below.
“In the last few days Clearwire launched the first 4G network in New York, which is now the world’s largest 4G market. And as of today our domestic 4G network reaches areas of the U.S. that cover approximately 100 million people,” continued Morrow. “In addition, we have announced planned December launches for San Francisco and Los Angeles, and we continue to expect to cover up to 120 million people with our 4G network by year end. While we continue to exceed our subscriber and operational goals, we have not yet secured future funding and prudence dictates that we take appropriate cash conservation steps to reduce costs. We continue to pursue all options for future funding including debt, equity or a potential sale of excess spectrum or other assets, and we remain cautiously optimistic that we will resolve our short-term funding needs in the near future. We continue to believe that our unmatched spectrum portfolio and our all-IP based network will keep us extremely well positioned in the dynamic and burgeoning market for mobile data.”
We've heard in the past that Clearwire was in need of some funding, but this news is quite a surprise, especially given all of the strong increases in customers and revenue in Q3. I'd be interested in knowing what's going on at Sprint HQ right now considering that Sprint is a majority owner in Clearwire. I'm sure that the WiMAX network won't be disappearing, but this news can't be sitting will with the No. 3 carrier. Maybe now Clearwire has more motivation to get partnered up with T-Mobile? Sure, T-Mo has their own 4G network now, but with the way things are going with Clearwire, it wouldn't hurt to try.