Updated with Sprint's plan to avoid impact from a potential Clearwire collapse.
NEW YORK (
(CLWR) has failed to get its partners
(CMCSA - Get Report),
(GOOG) to invest more money in its network expansion bid and now says it is cutting staff, delaying new market launches and looking for alternate sources of funding.
With a 54% stake in Clearwire, Sprint shares took a 3% hit on concerns that if Clearwire goes belly up, Sprint's standing with its lenders may suffer. As a result, Sprint indicated in a federal filing Friday that it could "take certain actions, at its own discretion and control, which would eliminate the potential for Clearwire to be considered a subsidiary of Sprint."
You sort of knew this day was coming for Clearwire.
early difficulty of lining up
all the initial commitments to get its WiMax network off the ground seemed to suggest the ambitious nationwide wireless broadband project would face more hard times financially.
launched service in New York this week
, says it is on target to spend $3.3 billion on network expansion this year. But the company has only $1.4 billion in cash and investments remaining on its books after starting the year with $3.8 billion.
After posting a wholesale subscriber gain of 1.83 million for the third quarter due largely to Sprint's sales of so-called 4G phones, Clearwire said it faces some dire choices.
The company says it "is in discussions with a number of its major shareholders and other third parties about a number of options, including potential strategic transactions, additional debt or equity financings and/or asset sales," according to a press release issued Thursday.
The company also plans to cut 15% of its staff and suspend the launch of its Denver and Miami market.
Clearwire was founded by cable TV and wireless pioneer Craig McCaw and entered a joint networking venture with Sprint in 2008. The company provides services to portions of about 60 cities in the U.S.
By going the WiMax path to wireless broadband, Clearwire set itself apart from the mainstream push into LTE that No. 1 and No. 2 players
(VZ - Get Report)
(T - Get Report)
are pursuing. To add to the confusion, Clearwire said in August it was exploring its own LTE technology plan, further putting the WiMax investment in question.
Clearwire shares were down more than 10% to $6.42 Friday.
--Written by Scott Moritz in New York.
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