Her article mentions Crest Financial's efforts to get Clearwire's "strategic", minority shareholders excluded from the vote on the merger. The reason is clear... they, particularly Intel, are not independent shareholders but are, effectively, part of the "control" group, as is sprint itself.
Clearly, Intel's support of Sprint's ridiculous, $2.97 offer for Clearwire will garner HUGE benefits for intel from sprint/softbank in return for their support. Intel will obviously end up selling a TON of chips on sprint/softbank's network and massive spectrum holdings once Sprint is able to #$%$ full control of clearwire from it's hapless, minority shareholders. Intel's benefits from such vendor relationships would dwarf any benefit they could get by voting against the buyout of clearwire and aiding in the minority shareholder effort to get a sub-optimal deal from sprint/softbank instead of the ridiculously horrible deal that's currently on the table.
Any judge considering Crest's request should require Intel to recuse itself from future business or vendor relationships with sprint in return for being able to vote as a supposedly "independent" minority shareholder...
... because if Intel is part-and-parcel to the huge future benefits that softbank would derive from screwing clearwire's minority shareholders in this deal, then they are CLEARLY part of the "control group" and should be recused from the upcoming vote on this matter.
No, I am not invested. I have been long on CLWR four times during the two upward moves and short, regretably, only once and sold options a few times, never long on the options. So, I have modest gains, no loses to become part of a class action or other advocacy.
... I don't agree with your contention that sprint/softbank are in the driver's seat because clearwire has something that they badly need and they've already created a substantial dependency on it.
Sprint has been touting it's unlimited, un-capped, un-throttled service for some time now without anywhere near the spectrum that's needed to support it's growth in dense populations. That spectrum deficiency will fast become more acute as Verizon and AT&T begin deploying LTE-Advanced on their freshly-aggregated, 40 mhz channels. Sprint/softbank don't have TIME to quibble with clearwire... they need to move on their strategy quickly with the protocol and frequencies that Mr. Son has done a very poor job of down-playing. His intentions are crystal clear and it's extremely important that minority shareholders don't get hoodwinked into thinking their bargaining position isn't as strong as it actually is.
The inter-dependency that you portray in your post is a great description of the fact that, while clearwire is NOT in the driver's seat...
... it nonetheless IS in the passenger seat with a firm grip on the driver's b@lls.
Clearwire has never had control over their business... while they have had control on their spending, which was deleterious before they clamped down on it under Stanton.
Customers are what controls any business... Clearwire has been defacto controlled by Sprint from the start which may have helped to lead to the predilection to how networks were deployed or the lack of 'innovation in the network' or with the early, window of opportunity stage of retail business development.. the stage in which Clearwire had money rather than a large debt with which to adhere partnerships and ferment 'revolution' in building networks and a retail that was integrated better with it.
Spectrum is regulated. That makes operators unlike most other business models. They are both in the clutches of the regulators and protected by them via the control on markets they are engaged. That too depends on the customer being at the root of how spectrum is orchestrated from how it is auctioned and for what technology standard and approach. Operators can have their spectrum taken away from them if they fail to use it, maintain the networks and customer services, and continue to reinvest a fair portion of their revenue back into the supply ecosystem and furtherance of advancements in deployments and services. Just ask the TV broadcasters what can happen from growing brain dead in applications of technology and service models. They still have not come up with adequate solutions because the industry is a disorganized mess in standards development and the model they use to drive standards and the ecosystem that results in 'new' being five to ten years old by the time it becomes available or so crippled its overtaken by the more agile mobile industry. I have problems with some aspects of adoption by the mobile industry and how open, top-down degree of control it has, but, nonetheless, that is within the context of an industry that is generally on 'Internet times mobile broadband' multiplier affect that causes rapid evolution to occur. Its also tending to cause rapid consolidation leading to near monopoly in aspects of the business that the FCC. DOJ and other regulators have problems dealing with. Rapid, disruptive changes that require large, revolving capex on top of licensed monopolies to spectrum leads to what.. an environment of tiptoeing through fields of daisies? No, it often leads to what we see here in America and many other places,
two or three dominant operators with all others sharing a small portion of the market... and usually at much lower profit margins.
That reality of the industry environment helps Sprint, among other factors, be in control of the spectrum THEY are the operating force in using. Clearwire is a patsy in the use of 90% of their network, almost 10 out of 11 million subscribers are due to Sprint. Even without the reality about how spectrum is managed, how the agreements are set up, including the agreement to provide service to Sprint, and the fact that the BODs and management have already agreed to the acquisition, thus putting counter weight on the scale to the abstainers, the market determines who is in control... and dat be da guys at Sprint-SB.
The only thing disingenuous is the way the corporation was structured and operated. To have one company able to act solely in its own interest through asset control, yet suggest it is an independent company IS by definition disingenuous. I doubt Intel will lose its voting rights, but the courts should closely scrutinize having a business charter (well understood or otherwise) where non-founding investors can have their investment value destroyed while a founding investor can reap all the benefits from the assets they controlled all along. I would think the Clearwire BOD will also have some explaining to do about the appearance of a disingenuous first offer being refused before the current better offer was accepted. What type of Board would not have openly made public an initial offer in an SEC filing where other potential offers could be attracted for consideration?
It seems quite reasonable for some disinterested party to look at this complete process as a major asset grab, accomplished by controlling both business development activity and spectrum sequestration by Sprint with a hand-picked “independent” BOD and condoned by an incestuously related Chairman.
This is all speculation of course, but in addition to retail investors lost value, it is most likely the reason for much of the emotion around this deal…no one likes to feel the playing field is not level and this spectrum grab feels just that way.
... even though he was compelled, as chairman, to support the softbank buyout...
... that John Stanton will be voting his shares against it.
The reason is because although the board can't risk condoning something that "could" result in another bond default... they also know that a bond default would never be something sprint would allow to happen... just as was true 13 months ago.
Bottom line... if this thing drags on for 2 years... that would be a HUGE drag on sprint/softbank's plans given the importance of "time-to-market" for LTE-Advanced deployments. Each month sprint/softbank spends falling further behind Verizon and AT&T will require 2 months (twice as long) to make that ground back up.
Getting 100% ownership of clearwire and focusing on building out the network quickly is FAR more important to softbank than paying an extra buck a share for clearwire ever could be...
... if we minority shareholders are going to be as smart as Softbank's Mr. Son, then we have GOT to come to realize that obvious truism.
The ownership structure and operations were set up from the start to combine Sprint's spectrum and WiMAX deployments with Clearwire's spectrum and move forward to use Sprint's ability to bring among the hottest devices at the time into the mainstream. This created most of Clearwire's business, over 9 out of 11 million subscribers and a majority of revenue.
Why didn't you read the SEC documents and other information?
The controversial issue is whether Clearwire had to sell at this time or whether they might have ridden the failing business model out long enough for it to see a revival of fortunes or a better deal for acquisition of the company or parts of its spectrum. The issue of whether the BOD and management fulfilled their fiduciary obligations can validly be explored but is certainly not black and white however it would be resolved. The facts have been that Clearwire has been building a business model that has been unsustainable as it did not provide an evolving network or level of service that was marketed to a degree of success or ability to fund internal growth that was needed. The only question had become how much Sprint or others would bail them out. Now its only a question of equitable payment.
I’m not a lawyer but I think the court may reject such a request as to discounting Intel’s voting rights based on ‘matter of law” on statues of contractual agreement such as Sprint has the right to acquire Intel shares under the Clearwire EquityHolder Agreement and that Class B shares can be converted to Class A with full voting rights.