a speculative long - clwr

clwr, started by legendary wireless pioneer craig mccaw, provides mobile, wireless broadband service to residential and small business customers in 16 us states, mexico and europe (ireland, belgium, spain, denmark). they cover 50 markets, including 400 cities & towns. the company has about 394,000 subscribers and a 12 month growth rate of about 91%. the company owns 2.5ghz licenses in the us and mexico; and 3.5ghz spectrum in europe, covering 16.3 million potential customers. major investors include the officers and directors, intel, eagle river, motorola, bell canada and qb wireless.

clwr is still talking, purportedly in an advanced state, with s, in hopes of piecing together a wimax partnership. last summer, the two companies reached a tentative agreement to build a national wireless broadband communications network, utilizing advanced Worldwide Interoperability for Microwave Access technology. the complex pact fell apart, however, when sprint became distracted with mounting operating problems within its own wireless division. sprint has hired new top managers, and its strategic focus is solidifying. a revised clwr/s partnership appears likely. the process is taking some time. apparently, clwr investors intc, mot and bell canada are weighing in on the negotiations. a weakening domestic economy, affecting all these players, is also probably slowing things down a bit.

meanwhile, clwr is expanding its existing network. in 2008, clwr plans to establish the new WiMAX broadband service, on its own, in the four us cities of atlanta, grand rapids, las vegas and portland (wa). these markets should initially add six million covered potential customers (POPs). in all, clwr plans to lift covered POPs by 20 million to 22 million in 2008; global POPs were 16.3 million, across 50 markets, at the end of 2007. the costs associated with this buildout will weigh heavily on consolidated margins this year and next, but should pay off handsomely in the long run. currently, the company is seeing favorable operating income benefits in established markets as they grow in scale. access to capital markets is very difficult, and management's success in finding new funds will determine how fast the company expands in the coming quarters. recently, the company has stepped up attention on cash flow generation.

this is a volatile stock. a new pact with s would go a long way toward supporting projections for wide share-price appreciation potential to 2011-2013. right now the market is punishing tech names with beta every day. if a market returns that starts to reward risk-taking, then owning clwr will most likely become much more lucrative. longer term, clwr will be a battle of growth expectations, new market opportunities and the need for future funding requirements and how and who they partner with. so that's a number of moving parts to consider. if the big partners like the MSO's, intc and goog can foot a lot of the bill that is much more beneficial to clwr than a string of secondary issuances. on their conference call less than a month ago, clwr ceo ben wolff noted the original discussions with s didn't maximize the full potential of the opportunity before them. he left investors dangling with the following quote, "we hope to be able to have something more definitive to discuss with you soon." the stock was pole-axed when the original s deal fell apart. if the deal as described in today's wsj is accurate, this looks to be exactly what is needed to achieve the "full potential." i'm expecting clwr to trade to between 30 and 40 by the 2010/2011 timeframe.

disclosure: long clwr leaps; looking at buying more