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Is Sprint getting cold feet about Pivot and Xohm?

As another bad quarter bites

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Xohm's future?

Xohm was the best weapon, but so far it has done little to generate the market confidence it badly needs. This is unsurprising, when Sprint is trying to do something so new and radical – create the first genuine mobile broadband, quad play, open access service in the west.

But the market does not see it that way. Investors have consistently failed to get the vision, and will only tolerate it if the company is delivering strong performance in its core businesses. Otherwise, Xohm is looking like a high risk way to spend $5bn and get very little back.

Therefore, although it may lose its best chance of medium term recovery, Sprint may well defocus on WiMAX. The most likely option is probably to merge the Xohm operation with Clearwire, already its close partner in building out the operators' mutual 2.5GHz spectrum holdings, and try to IPO the merged entity.

Clearwire would gain a greater stake in a merged national network for, in current conditions, a good price – an outcome that would be vintage for its founder Craig McCaw (who at least knows how to roll out and run a disruptive new wireless service). It would also serve to placate nervous Sprint shareholders, while allowing those that are supportive of the mobile broadband vision to take a position in the new entity.

Other possibilities are for Sprint to buy Clearwire, though it would be unlikely to be able to pay McCaw the money he would be looking for in the current climate; or to attract a new investor in Xohm.

Intel would be an obvious candidate, given its need to make WiMAX work in the US, and Google would also be a possibility, given its close partnership with Sprint – it is designing a software platform for Xohm with the operator, and the companies are likely to merge this effort with an expected partnership for Google's new Linux environment.

Any decision will almost certainly have to wait for a new CEO, creating more months of uncertainty over Xohm and US WiMAX in general.

Copyright © 2007, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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