February 28th, 2008
What happens to WiMax with Sprint on the ropes?
Sprint Nextel had a net loss of $29.5 billion, suspended its dividend and drew down its credit line for “financial flexibility.” Meanwhile, Sprint has jumped into the wireless price war fray with its own $99.99 a month all-you-can-eat wireless plan. Sprint’s woes wouldn’t be a big deal if the company wasn’t a key cog in the effort to bring WiMax to market.
Simply put, one of WiMax’s biggest champions is limping along so badly (Techmeme) that you have to wonder if the company can help push services mainstream. Let’s face it: Motorola, Intel and Samsung can push WiMax all they want and even throw billions behind the effort, but you need a carrier to hook people up. And the key carrier in this equation–Sprint–is gimpy to say the least.
Sprint lost $29.5 billion, or $10.36 a share, in the fourth quarter reversing a profit a year ago by a country mile. Revenue for the quarter was $40.1 billion compared to $41 billion a year ago. Churn is 2.3 percent and the company’s results “reflect the challenges facing our wireless business,” said Sprint. In addition, Sprint is the weak sister in an ugly price war launched by AT&T and Verizon Wireless. Sprint counted on Thursday with a $99.99 a month plan that offers unlimited voice, data, text, email, Web and other parts of the kitchen sink.
In a nutshell, Sprint is in trouble. Enter WiMax. Sprint has big plans for WiMax and hopes to use the newfangled high-speed wireless technology to leap frog other carriers. On paper, Sprint’s plan to open up WiMax, launch and SDK and open APIs sounds great, but it’s not clear that the wireless has the financial heft to deliver on its plan.
What’s next? Intel and Google and other WiMax proponents better give Sprint some sort of financial life support. If these technology titans don’t step up to help Sprint there will be a lot of WiMax technology out there with no carrier to provide service.
Larry Dignan is Editor in Chief of ZDNet and Smart Planet as well as Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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