... realize the value of it's assets.
If Sprint's plan is to drive CLWR into bankruptcy, CLWR could sell off it's assets without necessarily selling to company, which Sprint would likely not allow.
Clearly, Clearwire's spectrum and infrastructure would be immensely valuable to a cash-flush wireless operator or cable company that could, in turn, turn it into the dominant 4G provider that a few billion more could turn it into.
The value is there, even if the market values it at pennies on the dollar. Now that Sprint has cut the cord effective 12/30/2012 (and will probably plateau CLWR's sub acquisitions much sooner), it opens up a host of options not previously deemed viable if CLWR could grow alongside Sprint...
... simply selling all CLWR's spectrum not currently in use for WiMax and distributing the proceeds as a special dividend would make the current share price look ridiculous.
Friday's Gaffe by Hesse opens a whole new chapter in asset management, IMHO.
I don't have much knowledge in wireless tech. This psectrum that I hear people talk of clearwire owning a lot of it, why is it that clear is tethering on a financial death bed when it can sell this valuable asset and free itself? It looks so straight forward and yet clear has not done it or cannot do it for whatever reason, may be no buyers for this spectrum stuff. May be, the buyers are just sitting around and waiting for clear to die away in BK to get the spectrum dirt cheap. The business world is cruel. Look how dish grabbed blockbuster, LOL.
I know many of you may not like my idea, but I will vote for dilution and survival instead of BK. Clear has a better chance of protecting its valuable spectrum thru dilution and survival than BK. If BK happens, we all lose.
... is to presume that clearwire will remain a going concern over the next year, fail to attract a partnership with someone other than sprint, and get run into the ground as sprint converts CLWR's wimax wholesale subs over to LTE. Even with Sprint's support, CLWR wasn't projected to become EBITDA positive until early next spring.
The big problem with sprint is that sprint has a controlling position of 54% of the voting stock but founder Craig McCaw's minority, 30 million shares retain a "veto" power over sprint for major decisions such as a merger. McCaw and Hesse have been at odds over CLWR strategy for a long time.
Sprint now seems to think it can use CLWR's WiMax as long as it needs it then move those subs to sprint LTE. Sprint is gambling that CLWR won't line up a partnership before then and probably figures that if it doesn't, it gets CLWR assets cheap in a BK... or if it does, CLWR thrives and sprint's 54% stake thrives along with it. I'm thinking that if CLWR gets another partner that enables it to lauch LTE-Advanced that sprint could still have the option to sign on and use it as well as a wholesale customer... without having to put a dime into funding the conversion.
I've been floating a "nuclear" option just to demonstrate that "anything is possible" now that CLWR is much closer to a "nothing to lose" situation... in essence, that CLWR could sell off the 100+ mhz of spectrum that remains unused and raise enough money to pay a dividend that's significantly higher than the current share price...
... that's the kind of "what if's" you have to bat around when you're talking about a company that's trading as far below book and liquidating value as Clearwire is now.
Hope this helps,
Knock down CLWR... buy it at 1/2 price... use the money I saved to now build my own TD-LTE network for urban areas and get LS2 for rural, if they manage to get a product to market... sell S to Google and live happily ever after... throwing darts at Spok's avitar!
... then Clearwire would look at options to maximize shareholder value.
McCaw can veto any tender... he would be central to value-enhancing initiatives...
... and with their assets, there could be many.
Why not sell all of the spectrum and lease it back? Lots of hedge funds or sovereign funds would be interested in that. CLWR could even buy Sprint with the proceeds after paying the debt and building the LTE network.
Clearwire's spectrum is a diverse amalgamation of licensing rights and leases and, therefore, not an easy matter for a hedge fund or other financial group to assume. Clearwire/McCaw's group is good at ferreting out and negotiating the large number of agreements then patching them together for use.. a task others would find messy or out of their normal scope to take on under a new entity with lease back imo.
The spectrum Clearwire controls is not one or two clean blocks licensed from the FCC directly. That has an impact on the valuation and prospects for selling, leasing, or outright sale of Clearwire.
Of course, everyone knows that because that is a core understanding about Clearwire and how it is valued.
I don't think anyone should call CLWR a simple 'buy' or 'strong buy' because they are too vulnerable. The potential rewards are high but the company lacks funding and/or partnerships needed to pursue much of their goals. Sprint now looks aimed at defusing Clearwire's attempts to position outside of them.. taking the stand that they will sooner see Clearwire go under than forge an extended partnership to deploy multiple-carrier 4G.
The bet on CLWR has shifted to a do or die bet that the company will gain partners with capital and mutual expansion plans. The value of the spectrum held within this entity called Clearwire is subject to staying in business long enough to dig the gold out of the ground. You might characterize the company like a Canadian gold mining venture: very risky with many ulterior motives that can lurk bellow the surface and too few results to tell if the current pursuits will pan out.
... if clearwire were to sell off 100mhz of spectrum, the proceeds would be sufficient for the company to buy sprint...
... although sprint is a very sick company now. By the time sprint gets any critical mass out of network vision an launches LTE, they'll be paying so much interest on their debt and so far behind VZ & AT&T that they'll end up in a negative earnings vortex. Who would want to own THAT.
Clearwire has the assets... and sprint holds the subscriber cards. The sooner Clearwire acts to extract the value of those assets for shareholders, the more they're going to get for them. Time works in Sprint's favor now.
Spok, just wondering, do you still like CLWR at the present levels, I am long and just wondering want you thought. From what I understand it seems CLWR management wanted out from under sprint. Your thoughts
... ownership is ownership but Sprint has as little influence on CLWR's board as it's ever had and Stanton, McCaw and the board could certainly adopt actions to realize the value of the company's assets for shareholders. Both McCaw and Stanton have a big interest in seeing that happen before Sprint is in a position to dictate terms due to declining WiMax subs.
Companies often take actions to "unlock" the value of their assets...
... and precious few of them sell on the market at the ridiculously low discount to liquidating value that Clearwire currently does... the current stock price is arguably as low as 10% of liquidating value.