Clearwire fell 5.7 percent to $2.14 at 11:40 a.m. New York time. Google, based in Mountain View, California, plans to begin sales as of Feb. 27 at $1.60 a share, according to a regulatory filing today. Clearwire’s shares have lost 54 percent in the 12 months through yesterday.
The sale of the stake, for less than a tenth of what Google paid for it, comes amid increasing obstacles for the loss-making carrier’s prospects, said Christopher King, an analyst with Stifel Nicolaus & Co. in Baltimore. The Bellevue, Washington- based 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,” he said in a telephone interview.
Google owns 6.5 percent of Clearwire, or 29.4 million shares, according to data compiled by Bloomberg. At $1.60 a share, Google’s holding would be worth $47 million.
Google invested about $500 million in Clearwire in 2008 as part of group of communications and technology firms, including Sprint Nextel Corp., Comcast Corp., Time Warner Cable Inc. (TWC) and Bright House Networks LLC, 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.
Sprint owns about half of Clearwire and uses its network to offer higher-speed wireless service to its subscribers.
Clearwire reported a loss of 81 cents a share in the fourth quarter, from a loss of 79 cents a year earlier. In December, the company had said it was raising $595 million through two sales of common stock to build its LTE network.
Susan Johnston, a spokeswoman for Clearwire, declined to comment on the matter. Jim Prosser, a Google (GOOG) spokesman, declined to comment beyond the the company’s regulatory filing.
“Google periodically rebalances its investments based on its goals and its evaluation of market conditions,” according to the filing.