Clearwire downgraded on competition, spending
NEW YORK (AP) – Shares of Clearwire sank Wednesday as an analyst downgraded the wireless broadband service provider on increased competition and spending, a day after the company said its second-quarter loss shrank.
Raymond James analyst Ric Prentiss said in a note to investors that other carriers like Verizon Wireless pose a threat as they look to commercially deploy fourth-generation service networks in 2010 and 2011.
Prentiss also said he believes Clearwire might seek up to an additional $2.3 billion in funding it believes it needs to expand its own 4G network.
The company said Tuesday that its loss narrowed to $73.4 million, or 38 cents per share, during the quarter that ended June 30. It lost $79.6 million, or 40 cents per share, during the same period last year. Revenue rose 9 percent to $63.6 million.
Results came in a penny ahead of Wall Street's forecast of a 39-cent loss but missed the $65.2 million revenue target, according to a survey by Thomson Reuters.
Clearwire also said it ended the quarter with 511,000 total subscribers, a net gain of 12,000.
Prentiss downgraded the Kirkland, Wash.-based company to "Market Perform" from "Outperform" and said a significant increase in its stock price in the past month is not balanced against operational risks. The stock gained 46.5 percent in July, to end the month at $8.10.
Clearwire shares dropped $1.50, or 17.8 percent, to $6.90 in afternoon trading Wednesday. They have traded between $2.64 and $12.50 over the past year.