Clearwire Corp. (CLWR:US), the wireless- Internet provider that agreed to a Sprint Nextel Corp. (S:US) takeover in December, reported a wider loss than estimated and an 8 percent decline in subscribers.
The loss from continuing operations was 30 cents a share, the Bellevue, Washington-based company said today in a statement. Analysts had predicted a loss of 27 cents, according to data compiled by Bloomberg. Sales slipped to $311.2 million, compared with an average estimate of $312.8 million.
Sprint, which owns slightly more than 50 percent of the money-losing company, is attempting to buy out the rest of the shares so that it can use Clearwire’s airwaves to bolster its own network. In December, the companies agreed to a deal at a price of $2.97 a share. Clearwire is also evaluating a $3.30 counterbid from Dish Network Corp., though that offer is more complex and may require Sprint’s consent to be completed.
Clearwire shares were little changed today, closing at $3.18 in New York. The stock has climbed 10 percent this year, a signal investors expect Clearwire to fetch a higher price than Sprint’s $2.97 offer.
Clearwire said today that “substantial doubt may arise regarding our ability to continue as a going concern” if it fails to complete the Sprint deal, reiterating earlier remarks. Chief Executive Officer Erik Prusch has said that the company may have to restructure if it doesn’t get a transaction done. Blackstone Group LP has been advising the company on restructuring options.
When Sprint made its takeover bid, it offered Clearwire $800 million in additional financing in the form of exchangeable notes. The agreement followed a separate deal between Sprint and Tokyo-based Softbank Inc., which is buying a 70 percent ownership in the carrier for $20 billion. Clearwire said earlier this month that it hasn’t drawn on financing offered by Sprint, looking to keep its options open.
Sprint and Clearwire had forged a joint venture in 2008 to build a nationwide wireless network, backed by $3.2 billion in investments from Google Inc. (GOOG:US), Intel Corp. and cable companies. After losses piled up, partners such as Google and Time Warner Cable Inc. sold their stakes for a fraction of their original value.
This isn’t the first time Clearwire has warned of a potential funding shortfall. In November 2010, the company said it didn’t have enough money to afford 12 more months of operation. The company cut 15 percent of its staff and raised cash through the sale of debt and equity.
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