Longtime wireless industry veteran and Craig McCaw leutinant, John Stanton has promoted Clearwire’s COO, Erick Prusch to the position of CEO and President. Stanton, who stepped in from his position on Clearwire’s Board of Directors, has been serving as interim CEO since the departure of Bill Morrow in an executive level shake up earlier in the year.
Last week after announcing their Q2 results, Clearwire made big news as they announced that they were preparing to implement a new kind of LTE called “LTE Advanced-Ready”. Clearwire has been testing this technology and have reported that they’ve seen speeds as high as 100mbps to a phone. These speeds tower those of Verizon Wireless and AT&T’s upcoming 4G LTE networks.
More after the break
While this sounded great for about thirty seconds there was one little tiny caveat and that is that Clearwire needs cash to start this network. You may remember as 2010 closed out Clearwire was bleeding badly, they made staff cuts, looked for new investors and to this day they haven’t shown a clear road map or lit up any more markets since the start of the year.
While Prusch’s promotion was announced today, Monday top ranked Wall Street firm Bank of America/Merill Lynch, downgraded Clearwire over growing concern. They now expect that Clearwire stock may dip as low as 50 cents a share, which may run the risk of getting them de-listed. BOA/Merill Lynch downgraded Clearwire stock to underperform from their previous neutral rating.
Basically Merill Lynch says that Clearwire has exhausted every avenue to raise more money. They’ve gone back to Sprint and struck a new (much smaller deal), they’ve gone to other potential investors and as Merill Lynch’s Michael Funk said Clearwire has “has effectively exhausted its secured debt capacity,”
According to Funk, to raise the money for their 4G/LTE project naturally Clearwire would need to add 9 million new subscribers to it’s current WiMax service to date Clearwire only has 7.65 million customers. Earlier this year it looked like yet another investment from Sprint could help Clearwire however Sprint recently announced a 15 year 9 billion dollar deal with LightSquared to offer 4G/LTE services.
It looks like a great time for Prusch to take over, Right?