As most of us watched with dismay over the past few years as Sprint methodically drove Clearwire's price into the sewer, Dan Hesse watched with glee. Now we all know what he has known for years... that it was all about picking up 100% of clearwire for pennies on the dollar.
We know now that Hesse's big mistake was not ensuring that he could afford to act decisively when the apple was ripe for picking. Sure, he was successful in trashing clearwire down below a buck a share... but he forgot that price ultemately cures price and he was un-prepared when the other Wolves raided what he thought was his own, private hen-house.
Charlie Ergan was the wolf-in-chief, and was the guy who would "cure the price", as my friend Don Hays would say. His secret bid for clearwire last august turned on a light in Hesse's head... he had clearwire's stock driven down to where he wanted it... but he didn't have the dough to buy it out.
Thus began Hesse's frantic efforts to get his just rewards for screwing clearwire's minority shareholders. He could get a premium price for Sprint from Softbank by trumpeting his ability to grab clearwire for the acquirer for a song. We all know there's no way sprint could have gotten $20 million for the 70% stake without the slaughtered clearwire lamb in tow and softbank's main financier of the deal underscored that by saying there was no deal for sprint unless sprint secured 51% of clearwire... obviously pursuant to bidding for the other 49% once the deal was inked... all while claiming that that wasn't necessary. Oh, such propaganda with such frantic moves.
But it was too late. Softbank's wet dream of getting clearwire for a ridiculous $2.97 was already subject to the process of "price curing price"... and Ergan made his counterbid... which was striking in and of itself given the value he was placing on a minority position opposite a wicked guy like Hesse who could care less who gets hurt in his quest for stardom.
Now, everybody's talking spectrum value and foreign ownership of more than twice the spectrum than Verizon and AT&T own COMBINED... and Softbank's Mr. Son is, believe it or not, sitting on his shaking hands as the potential for a great deal deteriorates into a morass of regulatory and judicial muck. So much for timing, huh?
Each and every day, spectrum demand rockets higher and Clearwire sit's in the middle of a gloriously delightful stalemate. AT&T's spectrum demand is doubling every year... and clearwire's 160 mhz of contiguous future piece of mind is climbing the flagpole of everybody's conciousness. Frankly, I'm surprised China Mobile hasn't teamed with dish to offer something even MORE compelling for whatever piece of that goldmine it could snag.
Yes... Dangerous Dan Hesse was a victim of his own success in trashing clearwire's stock price... because he wasn't ready, and he wasn't timely and assertive once he acted with a dear with it's eyes in the headlights named Mr. Son.
Now, he'll pay the price, as DOJ, FCC, Crest, Kellett, the courts, Dish, and who the heck else will jump into this big pot of precious resource. $10 to $20 billion worth of contiguous, world-data-standard, spectrum will have everybody throwing their 2 cents worth in.
Hesse is not paying any price, other than the one you are hoping for. CLWR stated they reached out to many entities with no avail to sell spectrum and garner wholesale agreements, etc. Hesse did not limit their ability to garner wholesale or sale of excess spectrum...they had NO takers! That is a fact, other than some small wholesale sign ups.
Trashing the stock...please spok, this is business and S negotiated a wholesale agreement and funding that saved CLWR from bk, S doesn't OWE anything to CLWR other than what they contractually agree to. CLWR failed to sign up any other major partners for wholesale, and its the main reason they are where they are at now.
You're rediculous low price has been bid all the way up to $3.30, and that is a conditional offer with spectrum sale tied to it etc! As much asyou would like it to be this is not about a bidding war, please read my comments beow and on another thread near the top of this board.
Generally you write good analysis, but this sounds like sour grapes.
@tickertape0, you do a fine job of answering your own posts. You say “they had NO takers”, but you correctly mention in your previous post “why would another telecom want a minority stock interest in CLWR”. They don’t, no other telecom WANTS to partner with Sprint as Sprint has not shown the capacity to partner even with a 50% owned entity, rather wants to hide behind a curtain of “this is business” so it’s just fine to trash a stock by talking inappropriately about BK. (By the way, don’t rewrite history, Sprint did not come running to save Clearwire, they were given virtually no options if Sprint wanted to avoid an open auction of Clearwires spectrum and have a viable NetworkVision).
You suggest the DISH offer is just posturing so they can make a deal with Sprint. Please expand on your thoughts, why would Sprint need to have a company like DISH greenmail them into a business arrangement which would very obviously benefit both, if they worked together? Then pretend you’re the CEO of DISH and tell me how you are going to establish a good business working relationship with your new partner by delaying the absconding of Clearwire shares, which potentially puts the very survival of Sprint at risk if the Softbank deal falls through. After all it seems very likely the Clearwire deal would have been “fete accompli” by now if not for the DISH offer. I have never met a CEO who would establish a new and critical business relationship with such conditions surrounding an agreement.
My final comment is that minority interest should do more than possibly force a higher bid, it should help drive an overall fairness review by the courts, which I believe is held to a higher standard than even fiduciary compliance of a BoD.
Your comments are good Spok, I would only caution that the SB-S deal was for a strange 70% which means they may have anticipated the problems of owning all of Clearwires' spectrum and had a wink-n-nod agreement with DISH already in place. Hosting DISH's new spectrum (along with any Clearwire purchased spectrum) and gaining content access fits nicely with what is needed to compete with VZ and the CableCo's program, plus Son's "Big Ideas".
The best news is the DOJ/FCC delay and the announcement of a "new" 4.99% investor late in the week. As I said before, the 4.99% allows anonymity as no immediate SEC filing is required, however what investment fund would care to maintain anonymity, only another wireless player initiating a new position would. The most interesting possibilities being DTV who has told the FCC that Sprint needs to divest for other to get involved, potentially AT&T as they would would be in the weakest spectrum position if the Sprint deal went through and yes, Google appears is moving forward with more than tests for a national hybrid network with at least fiber, WiFi/wireless and satillite of some sort.
The 4.99% is my favorite conspiracy theory now. I believe within it lies the final answer to this soap opera. I've been noodling over this too long and came to similar scenarios to what you have listed above. There is too much corporate $$$ on the sidelines now, what is it, $1.5Trillion? The richest man in the world is a telecom guy, others have noticed.
... but it doesn't surprise me and is part and parcel to my comment above about "who the heck else will jump into this big pot...".
This thing will be tied up for awhile but I think the fact that the FCC is likely going to want to spread the resources around as they typically do with things like spectrum will end up being a positive for clearwire. I'm certain that 160 mhz of spectrum is far too much for the FCC to sign off on being controlled by one, foreign entity... especially when combined with the spectrum that Sprint already has.
The reason is because I think Clearwire's efforts to get wholesale business and/or sell spectrum over the past couple of years has been hampered by would be buyers or partners being intimidated by the huge influence sprint has had over clearwire. If the FCC, as part of any buyout of clearwire, ends up doing an "arranged" disbursement of some of clearwire's spectrum as part of an overall settlement, it would likely come without any sprint strings attached and elicit more interest at a firmer price...
... especially if it takes a year to get there given the spiraling demand for spectrum today.
Minortiy interest does nothing other than possible force a higher bid by Sprint, but why would another telecom want a minority stock interest in CLWR, doesn't get spectrum just stock. As I stated in a different thread the only thing going on right now is Dish trying to bring Sprint to the table and force an agreement, JV, etc.
Dish needs network access not more spectrum and they certainly don't have the funds to develp their own network, and CLWR laughably does not have a nationwide network that can provde coverage as a carrier, just as a backstop in certain metro markets.
With all due respect there is no bidding war going on spok, there is Dish trying to be a disruptor to get into the wireless marekt before S acquires all of CLWR and leaves Dish in a weaker negotiating position. This is about negotiating leverage, and now Dish has forced the conversation with S. The home run from here is gone, and so was the easy money if you bought at the right time. Sorry but the reality is this isn't about a bidding for for proper valuation of CLWR, that just is not and does not show to be the case at this time. You're pumping a false proposition.
I see a big issue that needs resolution. Does clwr spectrum meets the cap criteria? If yes Sprint/SB loses if no, they will lose too. The sharks need clarification to determine what to do. They will not let SB dominate spectrum in US.
So True. as time goes on I think we will see a few other bidders for Clear Wire and I think Dish is only the 1st.
what gets me as stated in the Proxy if Dish 1st deal for Clear was depending on FCC / Gov. approving of a Spectrum change for Dish why are they jumping so fast to say Sprints offer is much better when they are also depending on a Gov. / FCC Blessing?. and not to mention a much harder one to get not being a American company.
also all this talk again about Clear and cash until the 3rd quarter and BK . when Sprint takes over there will be no more clear wire stock or share holders but with dish Clear could still be a wholesale company with the chance of the stock going even higher if Sprint don't get the votes.
except the sprint bid @ $2.97 and wait to see if the soft banks deal passes or fail and lose all or vote no and take the chance of getting even more of your investments back. Sprint has just over 50% of clear now so they control it seems they do not want fresh money in the hands of Clear that Dish will have cause now Sprint will have Clear Wires Debt on their books and they know the only way to get that off the books is turn stock back in, BINGO yes Sprint will lose control for sure that way and that is just what Hess woke up too.
Sprint has so much to lose this time around that i don't think they ever thought about. so yes in my eyes i think this could be a much Sweeter Deal in the months to come. Son also stated if the U.S.Gov, has concerns that he will except it and walk away from the Sprint Deal but is he willing to take the 25% of Sprint instead of the 70% he is seeking that is in the Rules is a wait see game.
Sentiment: Strong Buy
Sprint is chewing more than what they can handle. They have been planning a CLWR takeover at dirt cheap levels for some time now. If SB walks away, they lose everything and may be filing BK. if the govt places conditions on their merger and clwr buyout, they will still need to give up something and it will not be the same. Will Son continue with the deal if they have to give up something? That's the million dollar question.
getting outmaneuvered in deal making. Look at his deal making history at Sprint and Sprint's pps since he took the wheel. I would speculate both S and CLWR would have pps double their current value had Hesse been an honest agent for a fair deal. They could have been supporting LTE-A with the fastest speeds by far. Hesse is penny smart and dollar dumb. A visionary customer service agent and a CEO short sighted CEO. I'm sure the cable companies could not be happier that Hesse has no vision.