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Sprint 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 […]

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.

Wall Street has been clamoring for Sprint and Clearwire to merge their WiMAX operations and create a new company with a massive national footprint. The Wall Street Journal quotes Sprint’s acting CEO as saying that they are having “discussions” with Clearwire. The merits of that argument are understandable, but the reality is that it is unlikely to happen till Sprint finds a new CEO and the management team can finally get its strategy together.

It is important to note that Wall Street goes through phases of “new technology induced depression.” The early phase of deployment of new wireless and broadband technologies is one that’s full of uncertainty, but in the long term, bets on new technologies boost the respective companies involved. Sprint went through this shift with its PCS rollout, and more recently, Verizon (VZ) with its FiOS rollout. I guess WiMAX, despite all its potential, is going through that phase right now.

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  2. I learned long ago to disregard those Wall Street analysts.

    Wimax will eliminate the need for telephone landlines, cable, fiber and satellite. Anyone who can’t see the potential in Sprint and Clearwires’ investment should pull their heads out of the sand. What I don’t understand is Verizon’s continued investment in FIOS. Ten years from now it’s obsolete!

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  3. [...] what is going to happen to Xohm, Sprint’s planned WiMAX service. Will it be put on ice or will it become part of a new company with backing from Silicon Valley giants like Intel. One thing is becoming increasingly clear: [...]

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  4. [...] lot together, and create a brand new company backed by some heavyweight Silicon Valley investors. The reports/rumors of this NewCo have been floating around for a few months now, but now there seems to be an urgency [...]

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