Google is dumping its $29.4 million shares in Clearwire for a spectacular $453 million loss, as support for the mobile broadband provider's 4G WiMAX technology wanes.
Google
(NASDAQ:GOOG) is selling its 6.5 percent stake in struggling mobile broadband
concern Clearwire (NASDAQ:CLWR) for $47.1 million, roughly a $453 million
markdown on its $500 million investment in the struggling wireless concern.
The search
giant revealed the offloading, which values Clearwire at only $1.60 a share, in
a
filing with the Securities and Exchange Commission.
The company explained that it sometimes "rebalances its investments based
on its goals and its evaluation of market conditions."
Google plans to
offer its 29.4 million shares to other Clearwire investors starting Monday
before selling them the following week to anyone who'd like to buy them.
Google plunked down $500 million for Clearwire in
May 2008, joining Intel, Comcast, Time Warner Cable and Bright House Networks
in investing $3.2 billion for the union of Sprint's (NYSE:S) and Clearwire's
wireless broadband businesses into a new wireless communications company.
Clearwire
created the first nationwide mobile 4G WiMax network, bringing speedy wireless
Internet access to consumers, businesses, schools and government agencies in
the United States.
WiMax pipes
data much faster than 3G wireless networks, allowing users to consume
multimedia and other bandwidth-intensive content from laptops, smart phones and
consumer electronics devices.
Sprint, which
relies on Clearwire's 4G technology to power its phones and tablet computers,
has a 49 percent stake in the venture.
The market for
WiMAX never matured and fell by the wayside as more robust 4G Long-Term
Evolution (LTE) networks emerged from Verizon Wireless and AT&T
(NYSE:T). T-Mobile uses a 4G technology called HSPA+.
With few
takers for its technology, Clearwire has hemorrhaged cash the last four years
and said recently that it may need to raise more money to fund its operations
beyond 2012. Reliant on Clearwire's technology, Sprint has supported Clearwire
throughout its dark time.
Clearwire,
which recently secured $200 million in financing, wants to spend $600 million
to build out its own LTE network.
Interestingly,
Google became the default search provider and preferred application provider
for Clearwire's new retail product and the default provider of Web and local
search for mobile phones from Sprint, which preloads Google Maps for Mobile,
Gmail and YouTube.
Google retains
that deal with Sprint.
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