Clearwire shares fall as Time Warner exits stake
LOS ANGELES (AP) — Shares of wireless infrastructure company Clearwire Corp. fell after Time Warner Cable Inc. said it would sell its 7.8 percent stake in the company starting as early as Monday.
THE SPARK: Time Warner Cable, the nation's fourth largest provider of TV signals, said in a securities filing on Friday that it would sell all of its 46.4 million shares in Clearwire.
The filing said the cable operator would sell its stake to other large investors including possibly Intel Corp. However, if the other investors did not buy all of its stake, Time Warner Cable said it would sell its shares on the open market starting on or after Monday.
Time Warner Cable spokesman Justin Venech said in a statement, "We believe it is an opportune time to start to sell the Clearwire shares in light of our arrangements with Verizon Wireless."
In December of last year, Time Warner Cable, Comcast Corp. and Bright House Networks said they could begin to sell Verizon Wireless services as part of a deal in which Verizon Wireless paid them $3.6 billion for spectrum that it would use to improve its cellular phone network.
THE BIG PICTURE: Time Warner invested $550 million in Clearwire in November 2008. Clearwire was formed then by combining its assets with those of Sprint Nextel Corp. to build a mobile phone network based on WiMax technology. The technology promised faster speeds than existing cellular networks at the time.
Based on Clearwire's closing price Monday of $1.54, Time Warner Cable's stake has dropped in value to about $71.5 million. That's about $478.5 million less than its initial investment.
THE ANALYSIS: Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group Public Ltd., already provides access to the nation's largest network using "4G LTE" technology, with service covering more than 200 Americans.
With its agreement to sell Verizon Wireless services, Time Warner had limited strategic incentive to maintain its stake in Clearwire.
SHARE ACTION: Clearwire shares fell 8 cents, or 4.9 percent, to close at $1.54 on Monday in the regular session, and fell a further 4 cents, or 2.6 percent, to $1.50 in after-hours trading. In the last 52 weeks, shares have ranged from a high of $3.12 last September to a low of 83 cents in July, according to FactSet.