No investor in a company ever wants to hear the company name and "bankruptcy" in the same sentence. But that is precisely what Clearwire's (News - Alert) interim CEO did at the recent CTIA show. Talking about Clearwire's current challenges, John Stanton, Clearwire chairman and interim chief executive officer, said the firm remains focused on raising capital to continue to build out its network, but also said he didn't rule out bankruptcy as a possibility.

"Bankruptcy is always an ugly option," he said. "That dynamic is not in the best interest of the shareholders," Stanton said. The reason Clearwire even is talking about that possible contingency is that it is a public company and already knows it will run out of operating capital by the end of 2011 unless new investment can be found. The company currently does not foresee reaching a break even position, on an operating cash flow basis, until sometime in 2012. 

Beyond that, it estimates it may need a couple billion more dollars of investment to complete its nationwide network. The company is trying to sell some unused spectrum to raise some of the money, but its biggest potential buyer, T-Mobile (News - Alert) USA, now is out of play because of the proposed AT&T acquisition. Stanton said the company continues to explore a spectrum sale, as "there are others out there that have a need for spectrum,” according to an article in the Wall Street Journal.

What Clearwire would like to avoid, if possible, is taking on any more debt. The company's annual interest payments already are about $480 million.

The company also is backpedaling from its own retail operations, which have been a source of huge attention with majority owner Sprint, which owns 54 percent of Clearwire. Most recently, Clearwire canceled plans to sell its own Clear-branded mobile phones after delaying their introduction last year.

The company will rely instead on handsets used by Sprint, and already has halted plans to increase the number of Clear-branded retail outlets, as well as marketing effort devoted to selling its own retail plans.  Those moves obviously are a retrenchment of sorts, allowing the company to focus on sales of wholesale capacity, where most of the company's gross revenue and growth is coming. 

Clearwire reported a $487.4 million net loss last year.

The wholesale-only approach typically is a difficult business model in the capacity business. Sooner or later, most firms that start out selling wholesale services and capacity ultimately launch retail operations as well. The tradeoff is always profit margin. Wholesale services feature lower margins than retail services, but also come with lower marketing costs. Many providers elect to go wholesale-only, later discovering that growth slows after some point. 

Those issues are likely to become significant for LightSquared (News - Alert) as well, as that firm attempts to launch a wholesale-only Long Term Evolution network supporting 4G wireless services. 

Despite pointing out that the company must find new funding sometime in 2011, Clearwire is not saying bankruptcy is inevitable, likely or preferable. But it still must raise billions in new funding sometime this year. Some would argue the most likely source of most such funding is Sprint, which already owns 54 percent of Clearwire, and which continues to say that the Clearwire spectrum and network remain part of its plan for 4G. But others might also point out that there is quite a lot Sprint could do with a couple billion dollars, including building its own LTE network, likely in collaboration with LightSquared. 

Though much industry attention over the year will be focused on AT&T (News - Alert) and its planned acquisition of T-Mobile USA, Sprint and Clearwire have some very important decisions to make as well.