Clearwire Reports Selected Preliminary Third Quarter 2011 Results
October 13 2011 - 9:00AM
Clearwire Corporation (NASDAQ: CLWR), a leading provider of 4G
wireless broadband services in the U.S., today reported selected
preliminary financial and operating results for the third quarter
2011, in advance of a presentation by Hope Cochran, Clearwire’s
CFO, at the Deutsche Bank Nineteenth Annual Leveraged Finance
Conference in Scottsdale, Arizona.
- Record quarterly revenues of approximately $332 million are
expected for the third quarter 2011, representing an increase of
approximately 126% year over year.
- Net wholesale subscriber additions are expected to total a
record 1.9 million for third quarter 2011, representing
approximately 29% sequential growth in ending wholesale
subscribers. Third quarter 2011 ending subscribers are
expected to be approximately 9.5 million.
- As a result of growth of its subscriber base and reductions in
operating expenses, Clearwire expects to have improved Adjusted
EBITDA loss by more than 50% in third quarter 2011 as compared to
pro forma Adjusted EBITDA loss in second quarter 2011.
- Cash, cash equivalents and investments as of September 30, 2011
are expected to be approximately $700 million.
The above amounts are subject to the finalization of the
company’s third quarter 2011 results. The company plans to
release full third quarter financial results in the coming
weeks.
About Clearwire
Clearwire Corporation (NASDAQ:CLWR), through its operating
subsidiaries, is a leading provider of mobile broadband
services. Clearwire’s 4G network currently provides coverage
in areas of the U.S. where more than 130 million people live.
Clearwire's open all-IP network, combined with significant spectrum
holdings, provides an unprecedented combination of speed and
mobility to deliver next generation broadband access. The company
markets its 4G service through its own brand called CLEAR® as well
as through its wholesale relationships with companies such as
Sprint, Comcast, Time Warner Cable, Locus Telecommunications,
Cbeyond, Mitel and Best Buy. Strategic investors include Intel
Capital, Comcast, Sprint, Google, Time Warner Cable, and Bright
House Networks. Clearwire is headquartered in Bellevue, Wash.
Additional information is available at
http://www.clearwire.com.
Forward-Looking Statements
This release, and other written and oral statements made by
Clearwire from time to time, contains forward-looking statements
which are based on management's current expectations and beliefs,
as well as on a number of assumptions concerning future events made
with information that is currently available. Forward-looking
statements may include, without limitation, management's
expectations regarding future financial and operating performance
and financial condition; proposed transactions; network development
and market launch plans; strategic plans and objectives; industry
conditions; the strength of the balance sheet; and liquidity and
financing needs. The words "will," "would," "may," "should,"
"estimate," "project," "forecast," "intend," "expect," "believe,"
"target," "designed," "plan" and similar expressions are intended
to identify forward-looking statements. Readers are cautioned not
to put undue reliance on such forward- looking statements, which
are not a guarantee of performance and are subject to a number of
uncertainties and other factors, many of which are outside of
Clearwire's control, which could cause actual results to differ
materially and adversely from such statements. Some factors that
could cause actual results to differ are:
- We have a history of operating losses and we expect to continue
to realize significant net losses for the foreseeable future.
- If our business fails to perform as we expect in the near term,
we will require additional capital to fund our current
business. Also, we will need substantial additional capital
over the intermediate and long-term. Such additional capital
may not be available on acceptable terms or at all. If we fail
to obtain additional capital, we may not be able to continue to
operate.
- O ur current plans, and our expectations about achieving
positive Adjusted EBITDA and cash flow, are based on a number of
assumptions about our future performance, which may prove to be
inaccurate, such as our ability to substantially expand our
wholesale business and implement various cost savings
initiatives.
- O ur business has become increasingly dependent on our
wholesale partners, and Sprint in particular. If we do not
receive the amount of revenues we expect from existing wholesale
partners or if we are unable to enter into agreements with
additional wholesale partners, our business prospects, results of
operations and financial condition could be adversely affected , or
we could be required to revise our current business plans.
- We regularly evaluate our plans, and we may elect to pursue new
or alternative strategies which we believe would be beneficial to
our business, including among other things, expanding our network
coverage to new markets, augmenting our network coverage in
existing markets, changing our sales and marketing strategy and or
acquiring additional spectrum. Such modifications to our plans
could significantly change our capital requirements.
- With Sprint’s recent announcements about its plans to switch to
LTE, we believe we will need to deploy LTE on our wireless
broadband network, alongside mobile WiMAX, to be able to continue
to operate in the long term. We will incur significant costs
to deploy such technology, and will need to raise substantial
additional capital to cover such costs. Additionally, LTE
technology, or other alternative technologies that we may consider,
may not perform as we expect on our network and deploying such
technologies would result in additional risks to the company,
including uncertainty regarding our ability to successfully add a
new technology to our current network and to operate dual
technology networks without disruptions to customer service.
- We currently depend on our commercial partners to develop and
deliver the equipment for our legacy and mobile WiMAX
networks.
- Many of our competitors are better established and have
significantly greater resources, and may subsidize their
competitive offerings with other products and services.
- Our substantial indebtedness and restrictive debt covenants
could limit our financing options and liquidity position and may
limit our ability to grow our business.
- Sprint owns just less than a majority of our shares, is our
largest shareholder, and has the contractual ability to obtain
enough shares to hold the majority voting interest in the company,
and Sprint may have, or may develop in the future, interests that
may diverge from other stockholders.
- Future sales of large blocks of our common stock may adversely
impact our stock price.
For a more detailed description of the factors that could cause
such a difference, please refer to Clearwire's filings with the
Securities and Exchange Commission, including the information under
the heading "Risk Factors" in our Annual Report on Form 10-K filed
on February 22, 2011 and subsequent 10-Q filings. Clearwire assumes
no obligation to update or supplement such forward-looking
statements.
Definition of Term
The company utilizes certain non-GAAP financial measures which
are widely used in the telecommunications industry and are not
calculated based on accounting principles generally accepted in the
United States of America (GAAP). Other companies may calculate
these measures differently.
Adjusted EBITDA is a non-GAAP financial
measure. Adjusted EBITDA is defined as consolidated operating loss
less depreciation and amortization expenses, non-cash expenses
related to operating leases (towers, spectrum leases and
buildings), stock-based compensation expense, loss from abandonment
of network and other assets, impairment charges, charges for
differences between recorded amounts and the results of physical
counts, and charges for excessive and obsolete network equipment
and CPE inventory.
In a capital-intensive industry, management believes Adjusted
EBITDA to be a meaningful measure of the company’s operating
performance. The company provides this non-GAAP measure as a
supplemental performance measure because management believes it
facilitates comparisons of the company’s operating performance from
period to period and comparisons of the company’s operating
performance to that of other companies by backing out potential
differences caused by non-cash expenses related to long-term
leases, share-based compensation and non-cash write-downs. Because
this non-GAAP measure
facilitates internal comparisons of the company’s historical
operating performance, management also uses this non-GAAP measure
for business planning purposes and in measuring the company’s
performance relative to that of its competitors. In addition,
Clearwire believes that Adjusted EBITDA and similar measures are
widely used by investors, financial analysts and credit rating
agencies as a measure of the company’s financial performance over
time and to compare the company’s financial performance with that
of other companies in the industry.
Clearwire expects to have improved Adjusted EBITDA loss by more
than 40% in third quarter 2011 as compared to actual Adjusted
EBITDA loss in second quarter 2011. Reconciliations of second
quarter 2011 actual and pro forma Adjusted EBITDA loss can be found
in the company’s Form 8-K filed on August 3, 2011.
Third quarter 2011 preliminary Adjusted EBITDA is an estimate
and subject to accounting adjustments. The company has historically
recognized substantial expenses that have been excluded from
Adjusted EBITDA in prior periods. The company expects to incur
additional charges and write-offs in the third quarter that
similarly will be excluded from Adjusted EBITDA and, thus, are
not reflected in the company’s estimate.
CONTACT: Investor Relations:
Alice Ryder, 425-636-5828
alice.ryder@clearwire.com
Media Relations:
Susan Johnston, 425-216-7913
susan.johnston@clearwire.com
JLM Partners for Clearwire:
Mike DiGioia or Jeremy Pemble, 206-381-3600
mike@jlmpartners.com or jeremy@jlmpartners.com
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