Clearwire Corp.: Buy, Sell or Run?

Clearwire Corp. (NASDAQ:CLWR) was supposed to be the future of everything 'wireless internet' and was going to take in millions in revenue.  Enter Reality.  Since the much hyped IPO back in 2006 Clearwire shares are down 78%, hitting the $2 level back in March and now trading in the high $4 range.  The question now remains, is this stock worth getting into or do you leave it alone?

YTD in 2009 Clearwire shares are only down 4.8%, but its still terrible if you bought in at the 2006 IPO price above $20 or when it got up to $30 later that year.  Despite what the masses may be doing, shorts have been playing Clearwire and cashing in on its downfall.  The Short Percentage has scaled back, finviz.com has got to be wrong, they have it at 24% of the float.  However if you check the short position on ShortSqueeze.com you'll see that short percentage is only 4.13%.  According to Yahoo Finance as of May 26th they have the short percentage at 8.3% of the float.  I would trust shortsqueeze.com, after all, its what they do, here's their data on CLWR:

Analysts covering CLWR aren't touching this company with a 10' pole, there has only been two man enough in 2009 to attempt a ranking, that being Soleil and ThinkEquity. 

RBC, Citigroup, Wachovia (before they died), Pali, and Jefferies haven't made an upgrade/downgrade since 2008 and most since 2007.

Chart fun on Clearwire thanks to Finviz.com (my favorite for the 2 second chart check - analysis continues below):

WHAT TO GO ON?

There isn't much fellow Masters, what we do have are the results from the May 13th Q1 Earnings Call where Clearwire Corpposted a narrower loss, added more subscribers and changed up its top management team.

William Morrow, Clearwire's latest appointed chief executive, said Chief Operating Officer Perry Satterlee was stepping down and President Barry West was leaving that role to head the company's international business. In addition, Morrow named several new executives.

He also announced a plan to increase the company's 2,000-strong workforce by 50% this year.  That's a huge number and a big burn on their cash (what's left of it) and its got most of us saying, "is that really necessary?"

Clearwire is 51% owned by Sprint Nextel (NYSE:S), CLWR posted a Q1 09' loss of $71.06 million, or 38 cents per share, from a proforma loss of $76.44 million, or 41 cents per share, a year earlier, before its venture with Sprint.  Nothing to scream about, but let's face it, it could have been even shittier.

But before unusual items, Clearwire's quarterly loss of 37 cents per share was worse than the average analyst estimate for a loss of 32 cents a share, according to Reuters Estimates. 

SO WAS ANYTHING GOOD? 

Revenue rose 21% to $62.1 million, slightly below the average analyst estimate of $62.9 million, according to Reuters Estimates.

Clearwire, which introduced WiMax services in Portland, Oregon, in the quarter, said it had a surprisingly high 25,000 net subscriber additions in the first quarter, bringing its total subscriber base to 500,000.

UBS analyst John Hodulik said in a research note that he had expected net additions of 20,000.

But the company said net customer additions would be weaker in the current quarter due to a typical spike in involuntary customer disconnections at the end of the school year.

Clearwire told analysts on a conference call that it would increase its workforce despite the weak economy, as it works on expanding its network.

The company said it still plans to expand its WiMax service to 80 markets covering a potential 120 million customers by the end of 2010 but Morrow said this could change depending on the availability of capital.

Clearwire did not give a reason for West's departure from his role as president to head international business but said on the conference call with analysts that its focus is on the U.S. business.

LEAP OF FAITH

Just this week, Clearwire shares have traded between $4.45 all the way to closing after hours on Friday at $5.  What's to like is that if you are playing CLWR for a trade, you can get in and out thanks to the daily average volume of close to a million shares.   Besides the day traders, no one is paying much attention to Clearwire Corp. and should the company manage to start generating a profit, it could be a $10 stock in a heartbeat.  But that's the shot in the dark these days, and if anything, you buy Clearwire because you have faith in the product and vision this company hopes to deliver in the years to come.  The Masters recommend getting in CLWR at the low $4 range, expect a bumpy ride, but resistance holding at $4 even.  Happy Safe Investing.

Disclaimer: No positions in any of the securities mentioned in this publication.

SOURCE: http://www.reuters.com/article/rbssITServicesConsulting/idUSN1342101720090513?pageNumber=2&virtualBrandChannel=0