In its latest 10-Q business filing, Clearwire has enacted a plan to save cash following months of capital issues and discussions with outside parties in order to secure the money needed to continue its planned initiatives, which include further expansion, upgrades and the launch of its promised smartphone lineup, which is now delayed.
As a result of its new cost reduction plan, spending on sales and marketing has been drastically reduced, with further spending cut on branded retail locations. The planned Clear retail locations for the Denver and Miami areas have been canceled along with locations in other markets as well as beginning a 15% reduction in employees. Clearwire will also take steps to reduce its current contractor workforce as it looks to cancel service expansion not required under its current mandates until further funding is secured.
While the company expects that the actions will help it shore up short-term funding into 2011 to the tune of $100-200 million, it does run the risk of running out of money by the end of the year if it does not find enough money to continue operations. This follows Clearwire CEO Bill Morrowâ€™s comments actively seeking partners for outside investment, such as discussions with T-Mobile or an outright acquisition by majority shareholder Sprint earlier this year.
For its part Sprint has issued its own statement pledging to continue its support of 4G WiMax service following the emphatic support stated by CEO Dan Hesse following the Open Developers Conference late last month, with confirmation that discussions have taken place between Sprint and Clearwire on the possibility of additional funding being provided by Sprint. The statement can be found at the Read More link
Dan Hesse recently stated that Sprint has been in discussions with Clearwire regarding the financial status of its ongoing operations as well as Sprint potentially providing new financing. We expect those discussions to continue as we review alternatives with Clearwire. There is no assurance that the discussions will result in any transaction with Clearwire. Sprint is providing no additional comments on this matter at this time.
At Sprint, our 4G plans remain unchanged:
â€¢ Sprint has demonstrated unparalleled leadership in 4G. This dates back to our technology selection in 2006 and includes over two yearsâ€™ experience running a 4G network which now covers 80 million people in over 60 markets. We will continue to demonstrate network leadership and innovation in 4G in the years to come.
â€¢ This leadership has resulted in increased market share, especially in iconic devices like the EVO and Epic 4G. Sprint currently offers a dozen 4G devices and is on its third generation of several 4G devices before the competitionâ€™s launch of a single device.
â€¢ While our leadership will resolve these matters, Sprintâ€™s sales teams and retail associates will remain focused on leveraging 4G to enrich the lives of our customers and deliver solutions that save businesses time and money.