Clearwire (CLWR) definitely has the skill to line up all the powerful partners and clients. The communications service providers has the back support of most of the tech titans such as Comcast (CMCSA), Intel (INTC) and Google (GOOG) and now, Clearwire has a new partner: Clearwire have announced on May 13 that it would begin to buy devices and equipments from none other than Cisco Systems (CSCO), the world’s numero Uno in the making of networking gears.
They have released the financial results the same day and it clearly shows why Clearwire needs friends who are in high-tech places. The company is dealing with slow subscriber growth, widening losses, and has concerns over the pace at which it can enter new markets.
In the first quarter, Clearwire added 25,000 subscribers, which is just over the half the number of new users which were signed up a year earlier as it shifted its focus on new product mix. The company is a leader in technology known as WiMAX, which delivers high-speed wireless Internet access, ended the period with 500,000 subscribers. Sales rose 21%, to $62.1 million, while its loss ballooned to $260.6 million, from $97.4 million. Shares tumbled 10.5%, to 5.09.
Will Cisco Gear meet the corporate demands?
To meet up with the growing challenges, Clearwire CEO Bill Morrow announced sweeping management changes. COO Perry Satterlee stepped down, with the company not announcing a replacement. Bill Morrow, who took over in March, brought in former Lenovo executive G. Michael Sievert as the company's new chief commercial officer. Clearwire has also appointed Kevin Hart as the new chief information officer and Laurent Bentitou as the new chief people officer, among the other plans to expand the staff by more than 50% this year.
By announcing a deal with Cisco the Clearwire has reserved the most of fanfare. Buying Gear from the vendor might help Clearwire expand in the market for corporations and small businesses, as per Clearwire Chief Strategy Officer Scott Richardson. Currently, Clearwire's offerings are mainly targeted at consumers.
Cisco’s Linksys division which is mostly involved in making Wi-Fi access points for home will provide a range of devices based on WiMAX technology. It will appear in the market later this year. Cisco is also expanding its consumer device range and has recently acquired Flip camcorder maker Pure Digital Technologies.
Cisco is eyeing for WiMAX Network Business
Clearwire is also all set to line up its end user gadgets. They have Samsung who will be releasing the WiMAX enabled laptops this summer.
Cisco assumes that the agreement may perhaps open doors to more WiMAX network businesses. Cisco has tried hand in WiMAX since its 2007 acquisition of WiMAX equipment vendor Navini, but it has yet to make its place in the market valued at $1.8 billion last year and dominated by Motorola (MOT), Alcatel-Lucent (ALU), and Alvarion (ALVR) lately. Earlier this year, Cisco said it had won several WiMAX contracts in the Eastern Europe.
The agreement is also to boost up the WiMAX technology. Few of the WiMAX’s and Cisco’s hold it will be predicted on how successful Clearwire will be in attracting users and competing with the current carriers like AT&T and Verizon Wireless in mobile broadband. But the collaboration with Cisco might turn out to be beneficial for Clearwire and remove some of the uncertainties.
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