Some financial analysts don't like prospects for the new Clearwire, says Eric Savitz Barron's writer. Savitz notes that Citigroup’s Michael Rollins dropped his rating on Clearwire to "sell" from "hold," because the stock now trades at a “substantial premium” to fair value, which he puts at $13 a share, down from a previous estimate of $17.
Rollins says there are a host of challenges ahead for the new Clearwire, including coverage reaching less than half the U.S. population by 2010. There is an unclear path to dual-mode devices to leverage Sprint’s CDMA coverage.
The business plan remains underfunded and other mobile providers will be launching their own fourth-generation networks in 2010 or 2011. Rollins also sees potential channel conflict among the partners.The stock was also downgraded today by Pacific Crest’s Steve Clement, who now rates the stock "sector perform. The investment thesis for Clearwire has been that the company's spectrum assets were undervalued and that a catalyst would unleash their true value. The new deal exhausts that opportunity, Clement argues.
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