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Google to sell stake in wireless-broadband provider Clearwire

February 24, 2012|Bloomberg

Shares of Clearwire Corp., the unprofitable wireless-broadband provider, fell the most in two months after Google Inc. said it planned to sell its stake in the company.

Clearwire shares declined 16 cents, or 6.8%, to $2.11 for the biggest one-day slump since Dec. 20. The stock has tumbled 56% in the last 12 months. Google plans to sell its stake at $1.60 a share, according to a Securities and Exchange Commission filing.

The sale of the stake, for less than a tenth of what Google paid for it, comes amid increasing obstacles for Clearwire's prospects, said Christopher King, an analyst with Stifel Nicolaus & Co. in Baltimore. The Bellevue, Wash., company said this month that it may need new capital to fund operations beyond next year as losses widened in the fourth quarter.

"Clearwire has had financing challenges," said King, who recommends holding the shares. "It's got some business-model challenges, with the dominance of Verizon and AT&T."

Google owns 6.5% of Clearwire, or 29.4 million shares, according to data compiled by Bloomberg. At $1.60 a share, the Mountain View, Calif., company's holding would be worth $47 million.

Google will offer the stake to other Clearwire equity holders, including affiliates of Intel Corp. and Middlefield Ventures Inc., the filing showed. If they don't purchase the entire stake, Google will make the remainder available, in one or more open-market transactions, beginning about Monday, Google said. Other Clearwire owners include Sprint Nextel Corp. and Comcast Corp.

Google invested about $500 million in Clearwire in 2008 as part of a group of communications and technology firms, including Sprint, Comcast, Time Warner Cable Inc. and Bright House Networks, which combined invested $3.2 billion.

The purchase was part of a plan to reshape Clearwire into a company with 4G, or faster fourth-generation network technology.

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