Last May some of the biggest names in the technology and media business, including Intel Google, Sprint, and Comcast, teamed up to invest $3.2 billion in the startup Clearwire. The Kirkland [Wash.] company founded by entrepreneur Craig McCaw had high hopes of shaking up the wireless industry. The idea was that Clearwire would offer an alternative to the two big incumbent U.S. operators, AT&T and Verizon Wireless, by rolling out a technology called WiMAX that could provide superfast Internet service for cell phones, laptops, and other devices.
Today, Clearwire is just trying to keep its head above water. Although sales are on track to rise 50 percent this year, to $230 million, analysts expect the company to lose $715 million. Billions more in losses are projected for the coming years as Clearwire invests heavily to roll out its network. Clearwire needs to raise billions in additional capital in the midst of the worst economic downturn in decades or it will be forced to slow the pace of its rollout and give AT&T and Verizon a chance to gain ground in the race to build next-generation wireless networks.
Clearwire’s stock has plummeted 88 percent since its peak in mid-2007. The sharp fall has prompted backers to announce write-offs on their investments, including a $950 million charge by Intel and a $350 million charge by Time Warner Cable. Google and Comcast are expected to follow suit.
Potential Backer
In the months ahead, the credit crunch could crimp Clearwire’s ambitions. The company needs to raise an additional $2 billion to $2.3 billion to reach its target of offering wireless broadband service in most of the top 100 U.S. markets by the end of 2010. That looks like a stretch given the financing environment. “For companies that need financing to get their business model up and running, you…