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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

March 13, 2007 at 12:22 PM

Clearwire’s rough start

Various publications are all writing about how Clearwire’s stock is taking a beating. If you don’t trust me, check out links here, here and here.

Red Herring even asks the question here “Did Clearwire hurt WiMax?”

I ask, how could a company that raised $600 million in its IPO — despite the fact that it is unprofitable and unproven — hurt an emerging industry?

Still, to be sure, early today the stock continued to slide, but but is now rising a bit to about $21.75 a share — down $3.25 a share from its IPO price of $25.

Why is the company’s stock getting hit hard for not being profitable when that was spelled out in black and white in the company’s prospectus? Building a national and international network is not cheap. AT&T Wireless built a national wireless network for the $10.6 billion it raised from its IPO.

I think the Wall Street Journal had smarter coverage of what the IPO means in today’s paper, mentioning both Clearwire and Seattle-based Isilon, which went public late last year.

The WSJ wrote:

Many investors appear willing to turn a blind eye to profits if a tech company displays soaring revenues. The recent IPOs of networking company Riverbed Technology Inc. and storage company Isilon Systems Inc. — both unprofitable but boasting double- and triple-digit revenue growth — were oversubscribed by investors. On its first day of trading in September, Riverbed’s stock jumped more than 50%, while Isilon’s soared 77% on its debut in December. Both stocks still trade well above their offering prices.

“There’s now a tremendous willingness to pay for growth,” says Vadim Zlotnikov, chief investment officer at Sanford C. Bernstein. “We’ve had four years of unbelievable capital discipline. Now we’ve entered a bit more of a speculative environment again.”

Clearwire is speculative, but if you are willing to take the risk, you could lose your shirt, or be highly rewarded. Right?

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