Hmmm, I think they’re serious about this cost cutting thing. clwr has signed with Telech to outsource its customer support. Some 700 Clearwire employees will immediately switch companies, although Clearwire is keeping about 180 of them for the back office. Most of the company’s 6M+ subscribers are wholesale through Sprint, and therefore won’t notice of course. This follows Clearwire’s move a couple of weeks ago to outsource its network operations to Ericsson, which similarly moved 700 employees off their books.
Last November before it began actively cutting staff, Clearwire had approximately 4,200 employees. By the end of the first quarter, they had reduced that by about 1000 to filings, so with two groups of 700 being moved to the books of other companies that leaves 1800 or so minus whatever other additional cost cutting has been done since. That’s just a bit higher than their headcount at the end of 2008.
That doesn’t bring their SG&A down entirely proportionally, as they still must pay those companies they outsourced to. It merely (hopefully) optimizes the costs of that part of their business. Yet they are clearly taking some [pick adjective depending on personal slant: bold, drastic, aggressive, desperate, decisive] action in an effort to turn their finances into a form that doesn’t channel a pre-bubble dot com fiber buildout.
Meanwhile, a Bloomberg report says Clearwire has been taking the gloves off when it comes to signing up customers by bypassing credit checks in order to pump up those impressive subscriber gains they keep posting. The company denies it of course, but the pressures are such that at some level this sort of thing is bound to happen at one level or another. Should be interesting to see where the Q2 numbers come in, both in terms of subscribers and in terms of costs.
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Categories: Financials · Wireless
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Rob Powell says, “that doesn’t bring their SG&A entirely down proportionately, as they still must pay those companies they outsourced to.”
Proportionately means a proper relationship between things or parts including size, quantity, numbers, and ratio.
http://dictionary.reference.com/browse/proportion
If my SG&A was 24 percent before outsourcing my labor needs to a 3rd party and transferring responsibility to them at the same time, I would expect my SG&A to go down a couple of percentage points as a result of the “pooling effect” that an employment contractor should have as a result of its own “economies of scale” when delivering services to a larger base of employees.
If I can’t do that, i.e., bring my SG&A expenses down “proportionately” according to prior percentage levels(ratios), why would I give up “control” of my ee base otherwise?
Good to see they are cutting costs. I have yet to pull the trigger on this stock, but I really like the tech. I can’t really say the same about LightSquared from what I know so far. LS is building 40k base “stations”-w/ satellite. LS network is basically operating the same as a tower network except that it is using a Sat as one big tower extension in the sky. CLWR uses EM spectrum to connect and backhaul their towers (not wireless phone towers). I think this makes sense over multi t1’s (800m/s vs 1.5 sustained). Backhaul for cell towers has been a big bottleneck. Now I’m hearing that Sprint is looking at LS .. not to say “instead” of CLWR .. but.. well, you tell me. My point here is that, IMO, money into CLWR tech makes a lot more sense than the $$ into LS from a “whats best for reliable infrastructure” point of view… from what I’ve been able to ascertain thus far. Not to offtrack your article Rob, but this company needs to cut costs .. .or get help from the gov… or something because it seems to be the best solution for fast last mile and mobile data in rural/sparse pop areas.