Clearwire CEO Morrow: Q2 was a ‘Transitional’ Quarter

Though national WiMAX provider Clearwire Corp. (Nasdaq: CLWR) saw its net subscriber adds decline by more than 50 percent during its second quarter of 2009, CEO William Morrow said the company had expected the slowdown, and predicted the “transitional” three-month period would not be indicitive of overall positive subscriber trends for the rest of the year.

In a phone conversation with Sidecut Reports following the company’s earnings call Tuesday, Morrow said the second-quarter 12,000 net subscriber adds total for Clearwire was actually “better than we thought” it might be for a quarter where the company had mainly only one live market for its new 4G mobile WiMAX services, and was purposely cutting back on marketing of its pre-WiMAX services. For the first quarter of 2009, Clearwire reported 25,000 net subscriber adds.

“We fully expected the [subscriber adds] number to be lower than Q1, and in fact it was better than we thought,” said Morrow. “It was a bit of a transitional quarter to us, with new markets just being launched.” Clearwire, which launched its first mobile WiMAX “4G” market in Portland, Ore., in January, started selling services in Atlanta and Las Vegas just before the end of the company’s second-quarter close of June 30.

According to Morrow, Clearwire has purposely cut back almost entirely on marketing its pre-WiMAX services, which are currently available in 50 markets. He also said that seasonally, the second quarter has historically been the lowest subscriber-add part of the year for Clearwire, since many of its customers are college students who typically don’t add services until the school year starts in August or September. Morrow, however, declined to break out specific numbers detailing either the new number of 4G subscribers or the exact number of pre-WiMAX subscriber losses.

During the company’s conference call, Morrow predicted that Clearwire’s fourth-quarter subscriber add totals would surpass the combined numbers for the year’s first three quarters, an optimism perhaps born of the expectations for additions from new markets as well as subscriber adds from the company’s wholesale partners, a list that includes cable giant Comcast and Clearwire majority owner Sprint.

“The wholesale side [of the business] is really exciting,” said Morrow, who said that sales are already incoming from wholesale deals, and claims to “track that number every day.” Comcast has already said it will add Chicago and Philadelphia to its already-operating sales of Clearwire WiMAX in Portland and Atlanta by the end of 2009, and Tuesday Sprint announced that it would resell Clearwire WiMAX as part of its 3G/4G hybrid service offerings in all 25 markets Clearwire expects to launch during 2009.

Since we had Morrow on the line, we wedged in an extra question about the Clearwire-Cisco partnership, which Cisco didn’t talk about during its earnings call last week. Morrow did confirm that Cisco “has not taken a position in Clearwire from an equity point of view,” but that the companies are exploring ways to work together beyond their core IP infrastructure agreement.

“I meet with John [Chambers, Cisco CEO] and we talk about a variety of things to collaborate on, not just having them as an IP supplier,” said Morrow, whose company also added China’s Huawei to its list of infrastructure suppliers during a busy Tuesday. And despite naming some new markets Clearwire plans to launch in 2009 — including the Texas towns of Austin and San Antonio — Morrow declined to say when the company’s Silicon Valley testbed would be live for WiMAX tinkering.

“We need to save a little excitement,” Morrow said.

Leave a Reply