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Clearwire Corporation (CLWRD) Message Board

  • moorejos982 moorejos982 Oct 12, 2012 9:24 AM Flag

    Value of CLWR

    I have been a long time holder of CLWR and believe in the underlying value of its spectrum. Smart phone and tablets are the hottest growth segments in the market today. It now looks like Softbank will take a majority position in Sprint - at least 70% and a condition of the deal is that they own CLWR. Most of this speculation is coming from David Faber who generally has very good sources but talks were confirmed by S yesterday. So it comes back to what will S pay for the balance of the shares of CLWR. CLWR stock has been badly beaten up because its funding is in question. It had $4.2 billion in debt and the market cap after yesterdays run is $1.3 million per yahoo but Merrill Lynch shows it to be $3.55 billion. For S to buy out the rest of the shares ( including INTC and the cable companies) it will have to pay some sort of premium. Yesterday Merrill Lynch analyst David Barden put a price of $4 on CLWR. If we accept the Merrill Lynch market cap of $3.55 and a buy out of $4 a share this would put the value of CLWR at $6.4 plus debt. At 52% of $6.4billion = $3.3 billion for S to buy via debt or issue new shares so that Softbank will buy/make an investment for 70% of S of $13+ billion. It seems that $4 a share for CLWR is very doable but it ultimately comes down to Softbank being able to finance the S investment. I am holding my shares and going to ride this one out - good luck to everyone.

    Sentiment: Hold

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    • McCaw may only have ~ 30 million shares, but they are "priveledged" shares that give him exceptional say over major organizational issues such as this one.

      McCaw's say is one of several, principal reasons why I own Clearwire. With almost all of my investments, I look for strong, "insider sponsorship" so that someone with power on the inside has interests that are aligned with my own.

      McCaw won't let anyone get clearwire for a steal that doesn't respect the "forward value" of it's huge spectrum holdings. I'm sure that softbank is aware of what it's going to have to pay for clearwire and, IMHO, the bidding STARTS at 4 bucks.


    • S has been hesitant of CLWR for a long time. Now is the time for Mr. Hesse to show his true colors. If S doesn't really sees any value in CLWR then it should have no problem to let go of it. If SoftBank is willing to spend $19-20 bil. then buying controlling interest in CLWR is a lot cheaper. 2/3 of CLWR's shares at $5 would cost $5 bil plus the debt $4.2 bil. total cost approx.$10 bil. Softbank can refinance CLWR's debts at super low rates for immediate savings of a few hundred million. For additional $2-3 bil. they can build a state of the art network with lots of capacity. One wonders where this kind of scenario would leave S.

      • 2 Replies to venture2fun
      • Interestingly, if you consider Sprint already owns half the outstanding shares, the actual purchase costs would be $7.5B to $13.5B using the above analysis. That fits your numbers and seems within reach for Sprint with a SoftBank deal. It would also be well in reach of SoftBanks cash and debt access facilities according to some reports.

      • Thanks for the responses - nice to read some intelligent comments on the board. Venture - while I agree that Softbank can buy CLWR cheaper by going direct I don't believe they will. They need the customers and the critical mass that S have to support this sort of investment. Fineinvestor - I agree that the price could be above the $4 ( and I hope it is :))but CLWR is very reliant on S for funding - its the chicken and egg situation - S's leverage is that they will threaten to walk and CLWR don't have funding, CLWR's levearge is that they have the spectrum and know Softbank want them as part of the S deal. The reason I posted is that I feel the price is certainly north of the current $2.21 - provided the Softbanl/S deal does not fall apart. Either was Softbank has woken up the industry to the value of CLWR and its spectrum.

        Sentiment: Hold

    • Good analysis, but I’ll take a little different tact.

      Clearwire has 36 Billion Mhz-POP’s (160 Mhz of spectrum) and Hope had mentioned Softbank and recent spectrum ONLY sales, in the same conference, talking about AT&T, Verizon and Dishes’ 2Ghz high band spectrum purchases. These sales have been in the range of .35 to .68 per Mhz-Pop. A high level, straight calculation yields $12.6B to $24.6B, subtracting debt of $4B leaves a spectrum ONLY value range of $8.6B to $20.6B. However you need to add to those totals approximately $4B in existing network assets and you are back to $12.6B to $24.6B. That still leaves the value Sprint sees in the synergistics with the Clearwire business…primarily, already completed NV plans requiring Clearwire and the reported requirement of spectrum control for the SoftBank investment. Conservatively those would be in the $2B to $4B range with the possibility of it being higher by a factor of 3 or 4 based on Sprints inside understanding of the need for scale with a combined SoftBank, Sprint business. That puts it close to a valuation range of $15B to $27B or approximately $10.28 to $18.50 per share.

      You do have John Stanton doing the negotiating and its not his first rodeo, so I would anticipate the higher end of that range.