In its latest 10-K filing with the SEC, Google has revealed that it has sold off its minority stake in Clearwire for $47 million in cash, which represents nearly 9.5 percent of its original $500 million investment in the ISP and signals the beginning of the exodus for the initial investors that made up the original base for the company at its relaunch in 2008.
Shares in the ISP tumbled after the news was first reported by Bloomberg and Wall Street Journal earlier this morning. The shares will be offered to Clearwire’s remaining stakeholders before hitting the open market next week and represent a substantial loss for Google, although it took on a similar write down in 2009 when it wrote down $1 billion in losses on its previous holdings for both Clearwire and AOL.
Google along with Comcast, Time Warner and BrightHouse originally envisioned Clearwire as a springboard to ubiquitous mobile internet access as a bundled offering, while Google and Intel also envisioned PC makers and mobile device manufacturers adopting WiMax as an alternative to 3G mobile broadbad modems and took steps to drive support by developing compatible chipsets and services with manufacturers. In practice, this proved less than successful as adoption of WiMax equipped laptops and hardware was much less popular than anticipated compared to hardware with built-in 3G modems.
With Google selling its stake off and LTE becoming the dominant 4G network standard, it remains to be seen whether the remaining stakeholders in the original cable companies and Intel will continue to hold stakes in the financially struggling ISP, or whether they will continue to hold onto them as the company works on its own transition to LTE and LTE Advanced networks from its original pre-WiMax and WiMax Wave 2 networks. The temptation for the other stakeholders to sell is quite high at this point due to the failure of the bundled services model with WiMax service while cable companies look to other services to attract more customers and move away from offering mobile broadband and wireless services as a whole.
Clearwire has not been profitable since its 2008 relaunch and is currently seeking additional sources of funding to continue operations past the calendar year despite the increased investment from Sprint made last year in exchange for access to its currently planned LTE network, which still needs $600 million in funding in order to be completed and deployed. Sprint’s own LTE network, which Clearwire has a hand in developing will be rolling out in 5 markets this June.