Clearwire, facing a shortage of cash, will eliminate 15% of its workforce -- about 630 employees -- even as it doubled subscriber growth expectations to more than 4 million by the end of 2010.
In announcing third quarter results, Clearwire said it "is actively pursuing a number of options to resolve its need for additional capital," including potential strategic transactions, additional debt or equity financings and/or asset sales.
"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," Clearwire CEO Bill
Morrow said in a statement.
The company, whose investors include Comcast, Time Warner Cable and Sprint, has been looking to raise between $2.5 billion and $5 billion by selling as much as 40-MHz slices out of its 2.5-GHz wireless spectrum holdings, Bloomberg reported last month.
Clearwire's other cost-cutting measures are to include: a substantial reduction in sales and marketing spending, a suspension of additional retail channel market launches of the Clear-branded operations in select markets including Denver and Miami, delays in the introduction of Clear-branded smartphones, a substantial reduction in the contractor workforce, and the discontinuation of development activities for sites not required for its current build plan.
All together, the company expects potential cost savings of between $100 million to $200 million in 2010 and again in the first half of 2011. Currently, Clearwire has about 4,200 employees.
Clearwire added 1.23 million new subscribers in the quarter ended Sept. 30, to stand at more than 2.84 million subs.
Kirkland, Wash.-based Clearwire still expects to reach up to 120 million people with its 4G network by the end of 2010. It now expects subscribers to be more than 4 million by the end of the year, although some of those are out-of-market wholesale subscribers from whom the company expects to receive nominal revenue. Previously Clearwire projected 2 million subscribers this year.
At the end of the third quarter, Clearwire had 1.01 million retail subscribers and 1.83 million wholesale subscribers through Comcast, TWC, Sprint and other partners. According to the company, 45% of wholesale subscribers reside outside of the company's launched markets with "no or little usage" of the company's network.
Clearwire's wholesale revenue in the third quarter was $16.5 million, and the company said there are "unresolved issues around wholesale pricing." The issues relate to the application of existing wholesale pricing provisions to certain types of 4G devices, according to Clearwire, and once those issues are resolved it expects to receive up to approximately $17 million in potential additional wholesale revenue from these 4G devices for the third quarter.
Overall, revenue for the third quarter was $147 million, up 114% from a year prior, with a net loss of $564.6 million compared with a net loss of $305.5 million in the third quarter of 2009.
Clearwire had $1.39 billion in cash and equivalents as of Sept. 30, versus $2.27 billion at the end of June. The company expects full year 2010 cash spending to be approximately $3.2 billion to $3.4 billion.