Google Sells Clearwire Stake at a Big Loss
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.