The search giant will get back less than one tenth of the $500 million it sunk in the would-be WiMax superstar
Google has announced plans to offload more than 29.4 million shares in the wireless Internet service provider Clearwire.
The search giant, currently Clearwire’s third largest shareholder, filed documents with the US Securities and Exchange Commission stating its intentions to sell its 6.5 per cent stake in the company.
Google withdraws investment
Google plans to sell at $1.60 per share, totalling to $47 million (£29.6m) for the 6.5 per cent holding. Not only is the total dwarfed by what Google paid for it – $500 million (£315m) – but the shares are also being sold at a discount compared to the NASDAQ’s listed price of $2.27 per share.
In a letter to Sprint, Clearwire’s largest shareholder, and Comcast, Google offered the two companies right of first refusal to purchase the shares.
In the SEC filing, Google said that it “periodically rebalances its investments based on its goals and its evaluation of market conditions”. Bloomberg recently reported the Clearwire suffered substantial losses and weak revenues for the last quarter, with the company stating that it “may be required to raise additional capital in the near term to fund our current business, even in the absence of any further network development”. Considering this, Google would appear to be cutting itself loose from the flagging company with this move.
Last year, Clearwire decided to make the transition from WiMax, the 4G technology it pioneered in 2008but which flopped, to an LTE (Long-Term Evolution) 4G network. The decision was broadly seen as a way to keep up with Verizon, T-Mobile and AT&T who had started using the HSPA+ and LTE, the latter being regarded as the leading 4G technology in the long-run. Unfortunately, funding issues appear to have hindered the company over the last year, and, though their stake is small, Google’s share sale will be a difficult blow to absorb.
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