Clearwire (CLWR) does not have the IPO problem of selling shares to customers who see their investment drop in the first few days. But, the trajectory of the stock looks a lot like Vonage (VG).
Vonage started trading at $17.25 and by its third day on the market dropped as low as $12.91. Its value at that point was only 75% of its high at the IPO. Clearwire traded at $27.95 on its first day. Yesterday, it dropped as low as $19.52. So, it traded at 70% of its peak.
Vonage was a company based on a new technology, VoIP. It has lost a great deal of money, $583 million between 2003 and its IPO last year. The market had concerns about how Vonage would make money because of its large customer acquisition costs among other things.
Clearwire lost $457 million from 2004 through 2006. Similar to Vonage, its loses were growing when it had its IPO. And concerns are mounting about whether Clearwire can make money.
According to Marketwatch: "Although it is now flush with cash thanks to its IPO, Clearwire will need far more money to build out its network and sign up Internet customers in a hotly-contested market dominated by larger rivals." That sounds a bit like Vonage and its cable company competitors.
Another interesting wrinkle. Qualcomm (QCOM) claims to have patents for some of the technology underlying WiMax. Will its assert those? It sounds a lot like the claims Verizon (VZ) has against Vonage.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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