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Clearwire exec exodus may pave way for Sprint deal

Clearwire has a new CEO who is much more likely to complete a wholesale network agreement with Sprint.
Written by Larry Dignan, Contributor

Clearwire has a new CEO who is much more likely to complete a wholesale network agreement with Sprint.

Sprint and Clearwire have been negotiating a wholesale network agreement for 4G WiMax services. Sprint and Clearwire have indicated a deal was close. One hurdle for the Sprint deal might have been former CEO Bill Morrow.

It's no coincidence that Morrow was replaced with interim CEO John Stanton. Stanton ran Western Wireless, which was a wholesale wireless network that was sold to Alltel. Western Wireless also managed multiple network technologies.

Sound familiar? Clearwire has WiMax and plans a move to LTE in a hybrid network. Meanwhile, Sprint's network is also a hodge-podge of technologies. Given that backdrop, Clearwire's executive exodus could mean following:

  • The company saves some money.
  • Removes impediments to a deal with Sprint.
  • And sets Clearwire up to be a wholesaler that can chase other customers.

Kaufman Bros. analyst Ben Abramovitz said in a research note:

The multiple management changes may only add to investor uncertainty at this juncture and we certainly have no definitive reasons for all the departures, but some potential reasons at this juncture may include; first, Clearwire receives some obvious cost savings from the reduction in senior headcount. The executive long-term compensation plan was also modified to allow the company to pay stock in lieu of cash except to executives who were in place during the first two years of the plan (unless they elect to take the option to receive stock). Second, following the arbitration with Sprint some of the current executives may have had a difficult time fully mending the relationship with their key roaming partner, while some would have seen a diminished role as the company slows its expansion. Third, the existing management team may have been a hurdle to a more aggressive pursuit of the wholesale business over the retail business.

In other words, Clearwire's path forward is clearer with the new CEO even if it still needs cash and faces numerous challenges.


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