The strategic investment by DISH is still only an educated guess. DISH is not moving forward with their own spectrum let alone Clearwire's until they get the green light from the FCC. DISH has said that deployments, given the go ahead early next year, won't be in full gear until 2014 and they've hinted at further delays if forced to shift to a higher band in the channel bordering AWS spectrum. In any case, the time frame for DISH to push into deployments in anyone's spectrum is beyond the current frame of concern outlined by Kellett for CW running out of funding.
The debt investments into Clearwire can be viewed as a deal the likes of which common stock paupers can only dream: very high interest rate instruments with options. If rumors that much of the current debt had been hedged by short selling are half right, then what a deal its turned out for debt holders thus far.
Stock investors don't have the luxury of participation in sweetheart deals except, perhaps, in diluted participation. The name of the game is to follow, not speculate trends, money flows and charts. Clearwire looks like a sell-hold short term, an accumulate-buy on pullback or a break to the upside on strong volume and a long-term accumulate-buy with prospects for being either acquired or better funded once the Softbank deal goes through.
A more reasonable speculation is that DISH is considering partnering with Sprint-Softbank or, lower odds, with metroPCS/T-Mobile. In either case, using Clearwire's network for overlay of highly-impacted metro zones makes sense due to the extremely likely stress on BB video services. In that case, there would be little need for DISH to own Clearwire but the availability of optionable debt would give them a way to help assure their spot in negotiating deals with Sprint-Softbank... they could play that as 'we can go forward with or without you... and you need our deliverable content and services similar to the way Verizon needs the cable companies'. This also makes sense to DISH if SB-Sprint do go ahead to acquire Clearwire - similar to the cable companies and Intel, they may not want to part with shares/options at a low water mark price level.
The situation is encouraging for common stock investors but don't forget 'we are the peons who get no special favors and have no real say'. .. which is why even large fund managers tend to follow rather than pretend they can create trends in the stock.
I won’t disagree with your statements, but will say you have become a discouraging fellow for any investor. Very much a cynical view and should be confined to the more speculative portions of a person’s portfolio.
Many large and stable companies do not have novel business structures or a share price which can be made as volatile as Clearwire share price has. Of course for many active investors, you have seen 10% to 30% pps swings on little more than tempering comments by a ceo, such as what occurred with CAT this year.
Dish has crossed all of our minds the last few months. Imo buying CLWR debt is exactly what you say it is: a strategic investment. For the long run, I don't fancy Dish to be a good contender for the available excess spectrum. Imo they simply don't have the capacity in the short term to pull it of because they to are debt loaded. How will they be able to pay for it? Imo that's where the strategic investment comes in which gives them a lead in getting a(nother) deal done.
As was reported by TMF, Dish did increase its investment in CLWR debt. As of September 30th it was $745 million. They have made about $45 million on the transaction so far and I would assume those bonds have further appreciated since the S/SB deal was announced.
Here is the info from the Q:
Our current strategic marketable investment securities include strategic and financial investments in public companies that are highly speculative and have experienced and continue to experience volatility. As of September 30, 2012, our strategic investment portfolio consisted of securities of a small number of issuers, and as a result the value of that portfolio depends on the value of those issuers. In addition, a significant portion of the value of these investments is concentrated in the debt securities of a single issuer. The adjusted cost of the securities of that single issuer as of September 30, 2012 and December 31, 2011 was $745 million and $16 million, respectively. The fair value of the securities of that single issuer as of September 30, 2012 and December 31, 2011 was $790 million and $17 million, respectively. That single issuer has indicated that it will need substantial additional capital to meet its business and financial obligations beyond the next 12 months. The fair value of certain of the debt securities in our investment portfolio, including those of that single issuer, can be adversely impacted by, among other things, the issuers’ respective performance and ability to obtain any necessary additional financing on acceptable terms, or at all.
Sprint's investment designed to scare off Clearwire suitors - FierceBroadbandWireless
...Yet Sprint CFO Joe Euteneuer has indicated that despite the acquisition of Eagle River's holdings, Sprint would be unable to block a spectrum sale by Clearwire to AT&T (NYSE:T), Dish Network or anyone else that might be interested.
Dish may be the company Sprint most fears getting its hands on Clearwire. Charlie Ergen, Dish's founder and chairman, is rumored to already hold in excess of $900 million of Clearwire's debt, according to Tim Farrar, head of Telecom, Media and Finance Associates....