Google to sell off its stake in Clearwire at a $453 million loss

David Liu February 25, 2012 1
Google to sell off its stake in Clearwire at a $453 million loss

Google is selling its 29.4-million-share-stake in the struggling Clearwire for a paltry $47.1 million, a sizable markdown from the $500 million they paid for their 6.5% stake over three years ago. The transaction would ultimately value Clearwire at $1.60 per share, $0.51 less than its closing price as of 2/24/2012.

According to a filing with the Securities and Exchange Commission, Google “periodically rebalances its investments based on its goals and its evaluation of market conditions.” The search-engine giant plans to offer its shares first to other Clearwire investors, which include other big names such as Comcast, Intel, and Time Warner Cable, starting Monday, before making them publicly available the following week.

Back in 2008, Google joined these major investors when it put down half a billion dollars toward the total $3.2 billion investment in the Sprint/Clearwire union. In early 2009, Clearwire introduced its 4G WiMAX wireless technology. Promising much higher throughput speeds than the existing HSPA networks, Sprint rolled out WiMAX acroos the US and, about 18 months later, introduced HTC’s Evo 4G, the first 4G cell phone commercially available in the US.

Unfortunately for early adopters, though, WiMAX was quickly superceded both in speed and in market penetration by AT&T’s and T-Mobile’s HSPA+ networks and later on by Verizon’s (and others’) LTE networks. As a result, Clearwire’s technology fell by the wayside, failing to attract developers or manufacturers.

Despite its huge losses, though, Clearwire remains determined to carry on, recently announcing that they’d secured $200 million in financing. Apparently aware of the dead-end road that is WiMAX, Clearwire has announced its intention to spend $600 million rolling out its own LTE network. Reliant on Clearwire’s technology, Sprint has continued to support the ailing wireless provider as it competes with T-Mobile to be the last one to the LTE party.

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