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Why Spend Time on Clearwire?

Clearwire has several advantages as a play on 'True 4G' LTE because it sits on a large amount of spectrum.  Clearwire, Clearwire Holdings LLC and the interlocking relationships of Sprint, Intel (yes, still in the game), and Clearwire.   Why follow them when the company has displayed, sometimes awkward use of technology and exploit of markets to disastrous financial results?  I guess that stems from being ground in to analysis through building of case studies.  And so much pivots around what happens on the fringes because that often inspires competitive reactions and stalemate.  There are many case studies, each examples particular matrix of distress and opportunities within the broader matrix of industry and sub-trend analysis that is the livelihood of many people and the province of both government and private sector interests.

That past week Clearwire shot up on about eight times normal average daily volume.  The occurrence was, of course, the surprise hook up of Softbank and Sprint with obvious connection to Clearwire. This culminates years of development that has been heading toward fulfillment of the necessities of LTE-Advanced that is at a first stage of full implementation of the concept envisioned by among the best minds in the wireless and networking fields.

OK, lets not get too chatty on this freebie part of the site.. and few hard details of course.  But lets do something entertaining: have a quick look at the chart that follows:

Clearwire Boom

 Courtesy of StockCharts.com

Chart analysis will be a rare event - such as shown here in the Clearwire chart.

 

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Brief analysis:

 Clearwire has been a heavily shorted stock since its incarnation as what was called 'New Clearwire', ie the founders ot mobile WiMAX that amalgamated spectrum licenses and leases from Sprint and Clearwire.  This reflects much of the professional analyst sentiment: the company had been risky from the start because it was underfunded by at least half and then if they had pursued the business reasonably to exploit the technology rather try to impose half-baked solutions on the market.  The term 'market' can distract from basic issues.. "Oh, its this complex thing called the market, we will justify it based on market analysis without having a real plan that makes sense."

 Subsequently, short sellers piled on from the start, many of them hedging including bets on bonds and other investments. Last week I suspect a large portion of those shares were covered in the 120 million share run-up.  Enforcing the notion is much larger column traded during the past two days compared to any time in the stock's history.  Charts may seem mundane but they help support your ideas as you see the evolution of the company and industry take shape.

 Late last and early this year, I had forecast that Clearwire and Sprint would be heading, following the trendsetting of Verizon and AT&T and more recently cascading to DT/T-Mobile and metroPCS coming together to form a more perfect union to fight in the soon to emerge high speed broadband everywhere (or somewhat so). 

 This new industry direction is far from a new concpet or even a '4G' concept.  This '4G' thing has been the recipe book that was being thashed out among technologies around the turn of the century and then pursuing that recipe to start, and I repeat, start to baking the new ICT Adaptive Social Communications Environment, or ICT-ASC.    Once you put the wheels in motion you cannot stop it, therefore the only choice it to participate. 

 That makes the job of studying Clearwire less about studying a company that their situation.. which anyone can see from the chart has not gone according to the public plan... or what many had perceived it to be.  Of course, many knew just what the odds were for WiMAX mobile to compete and had ideas about how that Samson vs. Goliath battle must be undertaken.. which was as if you started the race with your arms cut off, which they were due to how the company went about the feeble use of the technology.

Those who haven't covered by now are probably not in a huge hurry although news of a deal and details of how plans may start to come into place can send the stock higher, but likely with much less gusto than the liftoff from the deflated price level.  

Many seem to line up behind speculation that Clearwire will be taken out, which many articles and comments suggesting Sprint will acquire the remaining shares of the company but with Softbank wanting a greater share than their suspected 70% stake in Sprint would likely control.  

Softbank is perhaps the worlds leader in actually implementing rather than just talk about small cell deployment strategies.  This should not come as any surprise to those close to the tecnology: Japan, S. Korean, China, and to some extent Taiwan have understood that small cell use would require implementing the advances within and implemented without disalowing adherence to the standards.  Work had begun both in terms of developing the business models that can lead to commerical success, more so, doing that through harnessing the technology by dealing with the limiting factors of cell device topologies and the interference that normally imposes.  The synonym eICIC, SONs, adaptive power and MIMO STC and others can be explained in terms of problems solved that was displayed in technical sessions over the years.  

Therefore, Softbank is a good fit with Sprint because it brings enbling use of technologies and fresh business perspectives.  This is no clouch of a company: their financial situaiton is ore predicated by capital and spectrum entrencment obstacles rather than focus or energy.  The new company must have both prudent and innovative business leadership to leverage their situation more effectively.  Clearwire is not a good expamle of 'innovation in the network' upon which business innovations might more competitively have sprung.  SoftBank and Sprint can be quite smart at times... they will need to be smart.

The  SoftBank people I've met and their results and technical and business discussions have to a large part favorably impressed me.  Sprint under Hesse finally ridding itself of the rotting Albatross of Nextel (Netbust Networks), has steered itself in the right directions but now needs the infusion of capital and talents.