Intel Clears Out Some Of Its Clearwire Shares
Chipmaker Intel says in a regulatory filing that it plans to sell up to 10 million shares of its holdings in the Wi-Max wireless broadband concern Clearwire through its Intel Capital investment unit. The move will allow Intel to “rebalance its portfolio,” it says, and also yield some tax benefits. The move would reduce Intel’s holdings in Clearwire by a little less than 10 percent.
As of the end of 2010, Intel Capital held about 10 percent of the equity in Clearwire, including more than 33 million of the Class A common stock, plus warrants on another 93,000 Class A shares. Clearwire’s 10-K shows that other Intel entities control another 65.6 million Class A shares and another 44 million shares of Class B Common stock. Between its holdings through Intel Capital and the other entities, Intel owns about one third of the equity in Clearwire and holds about 10 percent of the voting power. Clearwire’s biggest owner is Sprint, while Google, Comcast, and Time-Warner Cable also have a piece of the action. As John Paczkowski observed in 2008, its product may be called Clear, but its corporate structure is “clear as mud.”
It’s not the first time that Intel has reduced its holdings in Clearwire. In 2009, it said it would take a $950 million charge to write off part of the value of its Clearwire holdings given their poor performance in the market.
The move is certainly not going to help Clearwire shares today. After closing at $4.73 a share during the regular sessions, Clearwire fell to $4.55 after hours, which amounted to a drop of nearly 4 percent. And it’s no wonder Intel wants to cut its stake: Clearwire shares are down 41 percent over the last year.
On May 4, Clearwire reported a $227 million loss on revenue of $242 million. The problem was the curse of a growing subscriber base. It ended the quarter with 6.15 million subscribers, a surge of more than 500 percent over the 971,000 from the year-ago quarter, and said it expects to finish the year with more than 9 million subscribers. Costs are naturally through the roof, surging by 81 percent year on year to $930 million, causing it to burn through cash.