Clearwire Falls After Sales Forecast Misses Estimates

Clearwire Corp. (CLWR), which is building a wireless broadband network across the U.S., dropped as much as 13 percent in late trading yesterday after its full-year sales forecast missed analysts’ estimates and the company disclosed it may need additional money to fund operations.

Revenue will be $1.25 billion at most in 2012, the Bellevue, Washington-based company said. Analysts had predicted $1.36 billion on average, according to a Bloomberg survey. Clearwire also reported a wider fourth-quarter loss, hurt by higher interest and tax costs. The loss expanded to $236.8 million, or 81 cents a share, from $128 million, or 79 cents, a year ago.

Clearwire also said it may need to raise more money to fund its current business and build out new network capacity. In a separate filing with the U.S. Securities and Exchange Commission, the company said it “may be required to raise additional capital in the near term to fund our current business, even in the absence of any further network development.”

It may also need to raise “substantial additional capital” to fund its business beyond the next year, the filing said.

Clearwire’s shares tumbled as low as $2.06 in extended trading following the report. The stock had climbed 22 percent this year.

Stock Sales

The company, which is trying to build out a higher-speed long-term evolution, or LTE, network, in December said it plans to raise $595 million through two sales of common stock, bolstering the finances of the money-losing wireless broadband provider as it tries to turn profitable.

Clearwire said today it added 904,000 wholesale customers in the fourth quarter, for a total of 9.1 million such subscribers. Interest expenses almost doubled to $128.9 million. Sales more than doubled to $361.9 million, in line with the company’s Jan. 24 preliminary announcement that beat analysts’ estimates.

Recent troubles experienced by rival LightSquared Inc. could drive more wholesale customers to Clearwire, Chief Executive Officer Erik Prusch said in an interview.

“We’ve had confidence in our business model all alone,” he said. “While there have been some unfortunate circumstances for others, perhaps this means we can accelerate faster.”

New Customer

The company also said that FreedomPop, a startup backed by Skype Technologies SA co-founder Niklas Zennstrom, will become a wholesale customer. FreedomPop had previously struck a similar agreement with LightSquared and decided to look for an alternative after that carrier’s network introduction was delayed by regulatory setbacks.

The Federal Communications Commission said yesterday that it won’t let LightSquared begin service after an Obama administration adviser found that the service disrupts GPS navigation gear used by planes, boats and autos.

The company’s largest customer and shareholder, Sprint Nextel Corp., said in December that it will extend its purchasing contract with Clearwire and provide additional funds.

To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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