FiberTower Corp. (FTWR) is an alternative provider of facilities-based backhaul services to wireless carriers. Facilities-based providers own or lease a substantial portion of the property and equipment necessary to provide backhaul services. Backhaul is the transport of voice, video and data traffic from a wireless carrier’s mobile base station, or cell site, to its mobile switching center, or MSC, or other exchange point where the traffic is then switched onto a wireline telecommunications network. The Company provides backhaul services nationally by utilizing its wireless spectrum assets and fiber relationships to construct and operate high-coverage, high-capacity hybrid microwave and fiber networks. Its services provide wireless carriers a long-term solution for their increasing demand for backhaul capacity while giving them increased availability and reliability.  As of December 31, 2010, FTWR provided service to 6,400 billing customer locations at 3,276 deployed sites in 13 markets throughout the United States.

Source: Reuters.com, SEC Filings.

Investment Highlights

Shares of FTWR jumped 38.28% in the last five days; and inched up 0.01% in the last month.  Year-to-date, the stock is down 68.80%.

Early in August, the  San Francisco, Calif.-based wireless backhaul services provider announced its results for the second quarter ended June 30, 2011, which, according to CEO Kurt Van Wagenen, reflected solid adjusted EBITDA performance despite a revenue decrease from the previous quarter.

Service revenues for the second quarter 2011 increased by $5.0 million, or 27%, to $23.4 million, compared to $18.4 million for the second quarter of 2010.  During the quarter, the Company recorded $3.4 million of non-recurring revenue from the collection of early termination liabilities (ETL).  Revenue excluding the ETL was $20.0 million, increasing 11% compared to the second quarter of 2010. This increase was primarily driven by selling additional capacity and Ethernet services.

In addition to the previously announced Clearwire service terminations, the Company is experiencing an increased level of TDM churn as carriers migrate to Ethernet, primarily from AT&T in the second quarter.  During the second quarter, FTWR received service terminations from Clearwire and AT&T representing approximately $951 thousand in monthly recurring revenue and $8.3 million in early termination liabilities.  The Company collected $3.3 million of ETL revenue from these customers of which $1.9 million came from Clearwire disconnections related to approximately $434 thousand in monthly recurring revenue.  During the quarter ending June 30, 2011, the Company received service terminations from AT&T representing approximately $517 thousand of monthly recurring revenue, which was partially offset by new growth, and collected $1.4 million of ETL revenue.  FTWR had $5.6 million of uncollected ETL revenue due from AT&T at June 30, 2011.

Operating expenses were $31.5 million in the second quarter, compared to $28.0 million in the second quarter of 2010.  Included in second quarter 2011 operating expenses is a $3.1 million impairment charge related to the write-off of excess equipment compared to a $0.9 million impairment charge in the second quarter of 2010.  Excluding these charges, operating expenses increased primarily due to increases in cost of service revenues, including higher fiber service provider charges reflecting growth in Ethernet services and fiber network expansion and higher depreciation expense.

FTWR posted a net loss of $11.5 million for the second quarter 2011 was , compared to a net loss of $13.1 million for the comparable quarter last year.

Second-quarter 2011 adjusted EBITDA net of ETL was $1.2 million, improving $2.2 million, compared to a negative $1.0 million in the second quarter of 2010.  Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, severance related to reduction in force, stock-based compensation, gain on early extinguishment of debt, debt exchange expenses and other income (expense).  The reconciliation of adjusted EBITDA, which is a non-GAAP financial measure, to net loss is provided at the end of this release.

During the second quarter of 2011, cash consumption was $2.0 million, compared to $5.3 million in the second quarter of 2010.  Outstanding debt, including accretion, at June 30, 2011, was $168.5 million comprised of $133.1 million in the 9.0% Senior Secured Notes due 2016 and $35.4 million in the 9.0% Convertible Senior Secured Notes due 2012.

Capital expenditures for the second quarter of 2011 totaled $3.9 million, compared to $6.5 million in the second quarter of 2010.  Based on the projects completed in the second quarter and the pipeline of new business, the Company is tightening its expected 2011 capital program range to $15-$17 million from $13-$17 million.

Consolidated cash and cash equivalents at June 30, 2011, were $12.4 million, compared to $21.3 million at December 31, 2010.

Thomas Scott, chief financial officer of FTWR, commented in the release: “We continued to execute our capital plan in the quarter, booking short payback, high-return projects as we work with our customers to rebuild revenue in light of churn.  Given the volatility we are experiencing, our visibility on 2011 revenue and Adjusted EBITDA remains low, preventing us from providing a specific financial outlook.  However, our liquidity at quarter-end reflects both ETL collections and our conservation of cash, and we continue to believe our cash position will be sufficient to cover our estimated liquidity needs at least through June 2012.”

Source:

http://www.fibertower.com/corp/downloads/investors/11-08-04%20FTWR%20Q211%20Results%20Release%20Final.pdf

Technical Analysis

Source: http://stockcharts.com

FTWR is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

FTWR’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Source: Thomson Financial

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

Related Articles

1. Stock Report for FiberTower Corp. (FTWR)
2. Stock Alert for Clearwire Corp. (CLWR)
3. Stock Alert for Sprint Nextel Corp. (S)

Clearwire Corp. (CLWR), through its operating subsidiaries, is a provider of mobile broadband services. Its 4G network currently provides coverage in areas of the United States where more than 130 million people live. The Company’s open all-IP network, combined with significant spectrum holdings, provides an unprecedented combination of speed and mobility to deliver next generation broadband access. CLWR markets its 4G service through its own brand called CLEAR as well as through its wholesale relationships with companies such as Sprint, Comcast, Time Warner Cable, Locus Telecommunications, Cbeyond, Mitel and Best Buy.  At the end of the second quarter 2011, the Company operated networks in the United States covering areas where approximately 135 million people reside, including approximately 132 million people in 4G markets.  In the second quarter 2011, the Company expanded its domestic 4G service areas to cover an additional 7 million people.

Source: Reuters.com, SEC Filings.

Recent News

Shares of CLWR have spiked over 58% during the past five days.  The stock, however, lost 4.3% in the last month, and is down 53% year-to-date.

The stock traded as much as 48% higher on Friday, while volume swelled to a 17.4 million shares.

CLWR traded higher on Friday on speculation of a buyout deal. Sprint Nextel Corp. (NYSE: S) is negotiating with cable companies about a possible investment that may lead to an acquisition of CLWR, according to a Bloomberg report, citing three people familiar with the talks.

Sprint and Comcast, which are already investors in Clearwire along with Time Warner Cable Inc. (TWC) and Bright House Networks LLC, are discussing ways to provide funding to the money-losing Kirkland, Washington-based company so it can build out its high-speed wireless network, the Bloomberg report said.

CLWR this month announced its plan to add “LTE Advanced-ready” technology to its 4G network. The announcement follows the successful completion of 4G technology trials that achieved download speeds exceeding 120 Mbps and demonstrated the potential of the Company’s unmatched spectrum advantage.

The initial implementation of the Company’s LTE network would target densely populated, urban areas of its existing 4G markets where current 4G usage demands are high. The robust all-IP infrastructure already deployed in these markets can be leveraged to serve the company’s LTE needs, delivering significant capital cost savings compared to a similar overlay by other carriers of an existing 3G architecture.

Dr. John Saw, CLWR’s chief technology officer, said the Company’s extensive trial has clearly shown that its ‘LTE Advanced-ready’ network design, which leverages its deep spectrum with wide channels, can achieve far greater speeds and capacity than any other network that exists today.

Source: http://corporate.clearwire.com/releasedetail.cfm?ReleaseID=596508

Financial Summary

CLWR reported second quarter 2011 revenue of $322.6 million. Consolidated pro forma revenue for the second quarter 2011 was $293.7 million, a 151% increase over second quarter 2010 revenue of $117.0 million. In the second quarter 2011, retail revenue and other revenue was $191.1 million and retail average revenue per user (ARPU) was a record $47.59. Pro forma wholesale revenue was $102.6 million in the second quarter 2011, or $6.18 in pro forma wholesale ARPU.

Consolidated pro forma revenue and pro forma wholesale revenue exclude approximately $16.1 million of revenue related to wholesale services provided by CLWR to Sprint in the first quarter 2011, and approximately $12.8 million of a $28.2 million settlement amount from Sprint which relates to wholesale services provided prior to 2011.

Retail cost per gross addition (CPGA) was $313 in the second quarter 2011 compared to $443 in the second quarter 2010 and $295 in the first quarter 2011. Retail churn was 3.9% in the second quarter 2011, up from 3.2% in the second quarter 2010 and 3.3% in the first quarter 2011. Wholesale churn was 1.3% in the second quarter 2011, an improvement from second quarter 2010 wholesale churn of 3.0% and consistent with first quarter 2011 churn of 1.3%.

Pro forma adjusted EBITDA in the second quarter 2011 was a loss of $108.5 million, representing a sequential improvement of $85.7 million when compared to first quarter 2011 pro forma adjusted EBITDA loss of $194.2 million. In the second quarter 2011, actual adjusted EBITDA was a loss of $79.6 million, representing sequential improvement of $130.7 million when compared to first quarter 2011 actual adjusted EBITDA loss of $210.3 million.

The second quarter 2011 reported net loss from continuing operations attributable to CLWR was $160.5 million, or $0.65 per basic share, and the second quarter 2011 pro forma net loss from continuing operations attributable to CLWR was $167.0 million, or $0.68 per basic share. Including the effects of discontinued operations, the second quarter 2011 reported net loss attributable to CLWR was $168.7 million, or $0.68 per basic share, and the second quarter 2011 pro forma net loss attributable to CLWR was $175.3 million, or $0.71 per basic share.

Source: http://corporate.clearwire.com/releasedetail.cfm?ReleaseID=596507

Technical Analysis

Source: http://stockcharts.com

CLWR is presently near its upper Bollinger Band. This suggests that it is at a high level relative to recent action.

CLWR’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Source: Thomson Financial

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

Related Articles

1. Nasdaq Stock Leader; Clearwire spikes into Solid Gains
2. Stock Alert for FiberTower Corp. (FTWR)
3. Stock Alert for Sprint Nextel Corp. (S)

At last check, Clearwire shares were trading 19.13% higher at $2.18, with volume up from daily average of 7.73 million to 8.80 million. Clearwire shares are up 52% in the last five trading sessions.

Last week, Clearwire announced that COO Erik Prusch has been promoted to president and CEO of the company. Prusch takes over from Clearwire chairman Stanton, who was the company’s interim CEO.

Stanton said last week that Prusch has shown the ability and talent required to lead the company through one of the most competitive periods in the mobile broadband industry’s short history. Stanton added that under Prusch’s guidance the company will deliver value to shareholders as it continues to grow its business and leverage its unmatched and unencumbered spectrum advantage.

Earlier this month, Clearwire released its second-quarter financial results. The company reported second-quarter revenue of $322.6 million. The company ended the second quarter of 2011 with 7.65 million subscribers, representing an increase of 365% over the same period in the previous year. The company’s subscriber base at the end of the second quarter of 2011 consisted of 1.29 million retail subscribers and 6.36 million wholesale subscribers. Clearwire reported second-quarter net loss from continuing operations of $160.5 million, or $0.65 per share.

Clearwire provides 4G wireless broadband services.

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