Clearwire woes hit big backers

Two major backers of the Clearwire WiMax network took financial charges for their investments.

Financial charges taken by both Intel and Time Warner Cable on Wednesday put the spotlight on the tough prospects for Clearwire, the company that aims to build a nation-wide US mobile broadband network using WiMax technology.

Intel, the biggest backer of the fledgling technology, said it will take a non-cash charge of US$950 million to its fourth-quarter earnings, which are due to be announced Jan. 15. The announcement came as part of a warning that Intel will miss its revenue forecast for the quarter, which had already been adjusted downwards once before.

Also on Wednesday, Time Warner Cable said it expects to incur a charge of US$350 million from its Clearwire investment on its fourth-quarter results. Time Warner was one of three cable companies that joined with Google to invest a total of US$3.2 billion in Clearwire last May. Cable giant Comcast, which also participated in that deal, plans to take a charge of its own, according to reports published Wednesday.

Clearwire absorbed Sprint Nextel's WiMax network business as part of the May agreement, which closed late last year. As the deal was concluded, Clearwire said it had received the $3.2 billion investment. The cable operators plan to resell Clearwire service as a mobile complement to their wired offerings.

But the meltdown in financial and credit markets last year added yet another weight to an already heavy burden for Clearwire.

The company, which began as a wireless broadband service provider using pre-WiMax equipment, is attempting to build a network that would compete against both AT&T and Verizon in both the home broadband and mobile data arenas. Between Sprint's earlier buildout and Clearwire's own mobile WiMax system, which formally launched Tuesday in Portland, Oregon, there are just two cities served by the technology today. The funding the company has received to date is not expected to be enough to pay for the entire national buildout.

Numerous delays surely haven't helped Clearwire's stock, which has plummeted from more than $16 per share in February 2008 to a close of $4.98 on Wednesday. The falling price of the shares has impaired the value of its partners' investments.

Intel and the cable partners, which also include Bright House Networks, are likely to stand behind Clearwire for at least the next year or so, despite any financial pain they may suffer, industry analysts said. Intel, for one, is pushing hard to get WiMax integrated into laptops alongside Wi-Fi. But between fast wired broadband and 3G, plus the emerging LTE (Long-Term Evolution) fast mobile standard, Clearwire faces plenty of challenges.

"This isn't the kind of money-maker that I think many of these vendors envisioned," Gartner wireless analyst Ken Dulaney said. "They're going to do what they can to try to make this go (but) to make money, you've got to sell to millions of users."

WiMax would be ideal for residents in under-served rural areas, but there isn't enough population density there to support it, Dulaney said. On the other hand, for Intel, a bet on WiMax could still pay off in other parts of the world, he added.

Painful adjustments like those announced Wednesday can also help the situation, Dulaney said, recalling the Iridium satellite mobile service of the late 1990s.

"Iridium made sense when it got written down," Dulaney said. "At some point, Iridium was just way overpriced."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags WiMaxClearwire

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephen Lawson

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?