Clearwire, some hot air leaking

What a difference a weekend makes: last week Clearwire was toast of the town, and today its stock went tumbling down -about 9.4% before making a slight recovery towards end of the day. It is going to be the story with this stock, at least for near foreseeable future.

The next 24 months are rocky for the company. According to some street estimates, the company is going to have revenues of about $148.9 million in 2007, and $334 million in 2008, which is great growth, except the losses are going to increase equally fast – $273 million and $390 respectively.

Reminds me of another company that went public last year with much fanfare. Ted Tobiason, Managing Director with Deutsche Bank Securities who tracks the IPO market in a note to his clients noted:

The decent pricing but muted aftermarket performance suggests that the IPO market has mellowed a bit from its dramatic pricings and aftermarket performance of late. Certainly company specific issues affected the aftermarket performance including the difficulty investors had valuing a company with enormous losses. There were also questions about the technology and the inevitible jokes about “pre-mature WiMax”.

Nevertheless, I want these guys to succeed, if only to get some competition in the market. The consumers seem to want their service. Tobiason in his note writes:

On their roadshow they noted that 50% of the time they get 10% of any market they enter within the first year. They also said they are growing faster than any previous McCaw company. That is a serious concern to incumbent players.