Sprint is carrying Clearwire at $3.92 a share ($2.1 billion) and indicate that they believe that this is what the true fair value of the shares is. In the conference call they indicated that they basically didn't know anything about CLWR's finances.
Can someone explain the divergence to me??? One statement appears to be false and I'm not sure which it is.
Sprint's Recoverability Sprint's ability to recover the carrying value of $2.1 billion as of June 30, 2011 depends, in part, upon Clearwire's ability to obtain sufficient additional funding to support its operations and its ability to successfully develop, deploy and maintain its 4G network. Uncertainty regarding Clearwire's timing and ability to obtain sufficient additional funding could result in significant changes to Clearwire's stock price and value. A sustained decline in the estimated fair value of Clearwire that would be deemed to be other-than-temporary could result in a material impairment to the carrying value of our investment. We do not intend to sell our 54% economic interest in the foreseeable future, and recoverability of our equity investment is not affected by short-term fluctuations in Clearwire's stock price. Clearwire has reported significant net losses since its formation and we expect Clearwire to continue to generate net losses in the near term. The carrying value of Sprint's investment in Clearwire has declined approximately $1.8 billion since Clearwire's formation in November 2008, primarily resulting from Sprint's share in equity of net losses of Clearwire, resulting in a decline in Sprint's per share carrying value of Clearwire from $10.65 as of December 31, 2008 to $3.92 as of June 30, 2011. As of June 30, 2011, based on the assumed exchange of our Class B Common Interests for Class A Common Stock, the carrying value of Sprint's investment in Clearwire of $3.92 per share over Clearwire's closing stock price of $3.78 per share was equivalent to an excess of $75 million. At each financial reporting measurement date, we evaluate the excess, if any, of Sprint's carrying value over the estimated fair value of our investment in Clearwire to determine if such excess, an implied unrealized loss, is other-than-temporary. Our evaluations consider, among other things, Clearwire's market capitalization, which assumes expectations of future performance, as well as Clearwire's historical stock price, including historical and implied volatility associated with Clearwire's common stock. Based on our evaluations, we believe that as of June 30, 2011 the implied unrealized loss in value is the result of a temporary decline (See Note 15).
That's a pretty easy charge to make. Did you listen to the call?
There were several but just going back and listening to the last ten minutes the most direct was by Hesse at 2:38:20 or so where he made the following statements: 1) You will have to talk to Clearwire about their finances. 2) If there is a bankruptcy filing we will be part of the discussions. 3) There has been no wireless bankruptcy that we are aware of that has ever led to service being turned off.
The Sprint 10-Q clearly references Clearwire's finances yet in the conference call they are openly talking about a Clearwire bankruptcy.
I am a Sprint customer who switched over when the HTC EVO came out and Sprint/Clearwire were building out. I am pretty disappointed that the roughly $600 I spent on my families phones, the over $200 monthly cell bill and yet on Sprint's coverage is worse than my old cellular provider. I thought they were investing in their network but they stopped roughly a year ago and it is obvious that Wimax is not coming. That wouldn't be so bad if the 3G coverage was o.k. but it's lousy. When I have access to wi-fi the phone is pretty good on the data side (although being able to make a call is iffy).
I would love to say that Sprint is on the way back but they just declared failure. I'm looking forward to going someplace where I actually have to worry about exceeding data limits 'cause on the Sprint network it ain't gonna happen.
I agree that the unlimited plan is great, but it's hard for people to move and avoid ETF'S. You could end up paying $300 plus before the actual monthly plan fee. Then the family plan holders are even in a harder position to move because every time a phone is updated, that separate line has its contract renewed and extended. Dirty little trick by all phone carriers. Att being allowed to sell the old 3g phones for free exclusively hurt sprint & verizon.