Clearwire is exceeding its subscriber and operational goals, but it still needs funding, so it’s instituting “cash conservation” measures that include laying off 15 percent of its employees, or about 600 positions.
The cost reductions also include a “substantial” reduction in sales and marketing spending; suspension of additional retail channel market launches of the Clear-branded operations in select markets, including Denver and Miami; delays in the introduction of Clear-branded smartphones; a substantial reduction in the contractor workforce; and the discontinuation of development activities for sites not required for its current build plan.
It also has thousands of sites in various stages of planning and construction beyond its current build plan, and it’s going to suspend zoning and permitting in a portion of those sites until additional funding becomes available.
In a conference call with analysts yesterday, CEO Bill Morrow said the company is “cautiously optimistic” it can resolve its funding needs, and it is pursuing all options, including debt, equity or a potential sale of excess spectrum or other assets.
Executives said the reductions in workforce are not expected to affect Clearwire’s ability to serve existing customers, and the company still will have a net gain of 200 from year-over-year employment figures.
The cost cutting comes just as Clearwire added a record 1.23 million new subscribers for the third quarter, ending with a base of more than 2.84 million. The WiMAX carrier just this week launched its largest deployment yet in New York City, and it plans to launch in San Francisco and Los Angeles in December.
Even with the cuts, it’s on track to cover up to 120 million people with its network by the end of the year and expects to end the year with more than 4 million total subscribers, nearly doubling its original 2010 expectation of just over 2 million.
Clearwire shares were down more than 3 percent in after-hours trading, at $7.17.