Major investors in Clearwire, the new firm that plans to build the first nationwide high-speed 4G wireless broadband network, are feeling the pain of the economic downturn, big time. Time Warner and Intel both reported heavy charges due to their Clearwire stakes, as shares in the nascent firm dropped 60% in just 6 months. And as MarketWatch reports, that string of bad news is likely to lead to straight to another big Clearwire backer, Google.
Intel, Clearwire's biggest backer, said it will take a non-cash charge of $950 million to its Q4 earnings, while Time Warner Cable said it expects to incur a charge of $350 million during the same period, all due to their Clearwire investments. Comcast also plans an undisclosed charge related to Clearwire. But what about Google?
It's not talking, citing the quiet period running up to its quarterly earnings report later this month. But the news can't be good. Google teamed up with the cable companies to invest $3.2 billion in Clearwire, with Google's stake pegged at $500 million. While Clearwire just this past week announced it had brought its WiMAX service to Portland, Wash., it's only got two metro areas up and running so far (the other being Baltimore). While Clearwire is indeed a good idea for rural broadband users, and especially for Google, the timing for the new venture looks a bit off. Nationwide rollouts of next-generation wireless gear take huge amounts of investment cash--something that's notoriously in short supply in this economy.
It will be interesting to see if Clearwire can hold on until the economy rights itself a bit, and its investors can focus more on it, vs. their own financial futures.
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