Clearwire, Sprint Call Their Deal Off

[qi:___wimax] The WiMAX buildout took somewhat of a setback today, when Sprint Nextel (S) and Clearwire (CLWR) decide to not pursue their plans for joint development of a nationwide WiMAX network. The Wall Street Journal reports that the reasons for dropping the plan are “the complexities of the transaction and the departure last month of (Sprint CEO) Gary Forsee.”
The two companies were hoping to develop a network with extensive roaming agreements. Wall Street had initially welcomed the idea, but when Sprint hit the skids, investors started wondering if the two companies should merge their WiMAX operations and spin it off as a separate company. Maybe this opens up avenues for a separate company all together.
However, for now the deployment of WiMAX in the US faces some challenges. Two rival nationwide WiMAX networks are going to be cost a lot, and add financial strain to both the companies. This development is not such good news for WiMAX backers such as Motorola (MOT) and Intel (INTC). In sharp contrast to the US, WiMAX is gathering momentum in overseas, especially in emerging economies.

WiMAX: Sprint, Clearwire Mulling the Future, Maybe Together

wimaxsprintclearwire.gifSprint Nextel (S) and Clearwire (CLWR), two companies that are betting the farm on building out WiMAX networks, are getting no love from Wall Street analysts. Sprint just reported a disastrous quarter, and the continuing decline in revenues and subscribers might result in lower spending on its WiMAX efforts. Similarly, Clearwire is not growing fast enough to satisfy investors.

Pali Research analyst Walter Piecyk downgraded the Clearwire stock to sell, saying the recently launched PC Card is not selling as well as had been expected. He cites two reasons for the slow sales: high price point vs. CDMA PC cards, and lack of awareness. Piecyk is very concerned that the cost of deployment of WiMAX is going to be higher than expected; he thinks cap-ex could top a billion dollars in 2008.

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