Craig McCaw's Clearwire files $400M IPO
Copyright 2006 AFX News Limited
NEW YORK (AFX) - Wi-Max services firm Clearwire, led by cellular trailblazer Craig McCaw, filed Thursday to raise up to $400 million in an initial public offering.
The IPO comes as wireless phone and Internet service ramps up behind Wi-Max, a technology that provides broadband connections over long distances.
Clearwire plans to go public about 18 months after Intel Corp. signed on as an investor in a pact to develop products supporting Wi-Max technology.
McCaw, 56, chairman and CEO of the company since its founding in 2003, founded McCaw Cellular Communications, which was eventually bought by AT&T and turned into AT&T Wireless. He's also an investor in Nextel Communications and heads an investment firm called Eagle River.
Merrill Lynch, Morgan Stanley, J.P. Morgan, Bear Stearns and Wachovia Capital Markets are underwriting the IPO, which will trade on the Nasdaq under the symbol 'CLWR.'
While Clearwire offers investors the story of likely U.S. growth in broadband services, the company has no profit to show to date.
In 2005, Clearwire rang up a loss of nearly $140 million, more than four times the loss of $33 million in 2004. Revenue climbed to $33 million from $15 million in the year-ago period.
As of March 31, the company offered services in 27 markets in the United States covering more than 200 municipalities with an estimated 4.8 million people.
It also offers wireless broadband services in Brussels, Belgium and Dublin, Ireland, areas that together cover an estimated 1 million people.
According to technology consulting firm IDC, the U.S. broadband market is expected to grow at an 18.4% compound annual growth rate between 2004 and 2009, Clearwire said in its IPO prospectus. Broadband penetration is expected to exceed 52% of U.S. households by 2009.
'As purchases of laptops and other portable data devices continue to accelerate, we believe consumers increasingly will look for more efficient and effective ways to access the Internet on these devices,' Clearwire said.
Still, Clearwire acknowledged a myriad of competitors -- from cable operators offering high-speed Internet service to local phone companies, cellular providers, and even municipalities such as San Francisco rolling out wireless Internet services.
The IPO comes a week after Clearwire announced an agreement to offer its services to America Online customers starting in Daytona Beach and Jacksonville, Fla., as well as Stockton and Modesto, Calif., for as low as $25.90 a month.
It also inked a pact with Best Buy Cos. to sell broadband services in all of its U.S. markets where there is a Best Buy store.
Clearwire will enter the IPO pipeline as one of the few companies from the technology or telecommunications sectors.
Spansion went public late last year, and Embarq Corp. will soon trade as a spin-off from Sprint Nextel. On Wednesday, Infineon said it'll offer shares of its hefty Qimonda unit in the U.S. later this year.
Besides Intel, shareholders in the company include Eagle River Holdings, Hispanic Information & Telecommunications Network, and OB Wireless LLC.