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Clearwire Corporation (CLWR)

Q3 2009 Earnings Call

November 10, 2009 4:30 pm ET

Executives

Mary Ekman - Vice President, Investor Relations

William T. Morrow - Chief Executive Officer

Erik E. Prusch - Chief Financial Officer

G. Michael Sievert - Chief Commercial Officer

Analysts

Simon Flannery - Morgan Stanley

Rick Prentiss - Raymond James

Phil Cusick - Macquarrie

John Hodulik - UBS

Walter Piecyk - Pali Capital

Michael Funk - Banc of America Merrill Lynch

Kevin Rowe - Rowe Equity Research

Presentation

Operator

Good day, ladies and gentlemen and welcome to the third quarter Clearwire Corporation earnings conference call for 2009. (Operator Instructions) At this time, I would like to hand the call over to your host for today’s conference, Ms. Mary Ekman with the Clearwire Corporation. Please proceed.

Mary Ekman

Thank you, Latrice. Good afternoon, ladies and gentlemen. I’m Mary Ekman, Vice President of Investor Relations and I’d like to welcome you to our Clearwire Corporation’s third quarter 2009 financial results conference call. Joining us today from New York where they are preparing to launch the new bond offering we announced this morning are Bill Morrow, Chief Executive Officer; Erik Prusch, Chief Financial Officer; and Hope Cochrane, Senior Vice President, Finance and Treasurer. In our Kirkland office with me today are Mike Sievert, Chief Commercial Officer, and John Saw, Chief Technology Officer.

In a moment, Bill and Eric will discuss our results and then we will open the lines to your questions.

This afternoon’s call is scheduled to last approximately 45 minutes including Q&A.

As a reminder to all listeners, today’s call is being webcast live and will be archived on that site and available for replay shortly after we conclude.

I would like to note that we have issued three separate press releases today. I hope you have all had an opportunity to review Clearwire's third quarter earnings release, as well as our announcements this morning of additional equity funding, the new bond offer, and a common stock price offering.

A reconciliation of pro forma financial information and any non-GAAP financial measures discussed on this call can also be found in our earnings release.

Today’s call may contain forward-looking statements reflecting management’s beliefs and assumptions concerning future events and trends in or expectations regarding financial results. Forward-looking statements include, among other things, our future financial and operating performance and financial condition, including projections and targets for 2009 and subsequent periods, potential transactions, subscriber growth, network development and market launch plans, strategic plans and objectives, and the company’s goals regarding additional financing. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties. Listeners are cautioned not to put undue reliance on any forward-looking statements as they are not a guarantee of future performance.

Please refer to our press release and our filings with the SEC for more information concerning risk factors that could cause actual results to differ materially from those in the forward-looking statements. The company assumes no obligation to update any of these forward-looking statements.

At this time, I would like to turn the call over to Bill Morrow.

William T. Morrow

Thank you, Mary and good afternoon, everyone. We appreciate you taking the time with us today. This is no doubt an exciting week for us and when you couple today’s announcements with our performance in the third quarter, we hope that you can see evidence of the progress on our five key operating initiatives. And as a reminder, these include securing additional financing, expanding network coverage in the ecosystem, growing the retail business, growing the wholesale business, and building a team that can scale the business and deliver results.

On the funding initiative, we are delighted that the majority of our existing strategic investors have agreed to further fund Clearwire with the infusion of $1.56 billion in cash as part of a new equity investment round. Sprint, Comcast, Time Warner, Intel, Brighthouse and Eagle River will all participate. We share a common vision of providing the nation with a new category of Internet service unmatched by today’s standards. We are also launching a common stock rights offering to Class A shareholders, giving them a six-month option to purchase Class A shares at the same price as the new round of equity.

In addition to the equity financings, we are also launching a full debt offering today and if the planned amount of the offering is fully subscribed, it would free up at least another $240 million in capital for us in the near-term and substantially enhance our borrowing capacity longer term.

Collectively, if the debt offering is successful, this will enable us to access growth capital over the coming quarters with the range of $1.8 billion to $2.1 billion, and potentially more. This new round of financing will help us in meeting our funding needs for the 2010 targeted markets that we set forth in March of this year. In addition, we are adding flexibility to our capital structure in order to further access the debt markets when the timing is right.

Our ability to access this new equity funding is in part a result of solid operational execution against our 2009 business plan.

Our second key initiative is focused on expanding our network coverage and building the ecosystem. Our market growth during Q3 was significant. As you know, at the end of our prior quarter ending June 2009, we offered 4G services in just Portland and Atlanta. By the end of our third quarter, we had added 11 more markets, bringing our total 4G markets in this quarter to 13. These additions included Las Vegas, Boise, Bellingham, and eight Texas communities, which increased the total POPS covered by our 4G network to over 10 million.

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