Google to sell stake in Clearwire for $47m, a tenth of the price it originally paid
Google has filed documents with the SEC today in preparation for the sale of its entire stake in the troubled Clearwire Corporation. Having spent $500 million to acquire a 6.5 percent share back in 2008 …
Context & Ripple Effects
Google’s Clearwire position grew out of its 2008 search-and-communications collaboration with the wireless company, during a period when Google was also pursuing influence over wireless-network rules through the FCC spectrum auction process. Clearwire’s expanded $350 million stock offering in late 2011 had already underscored its need for outside capital.
Google’s planned exit turns a $500 million strategic holding into a $47 million sale, separating the company from an investment tied to its earlier wireless-access ambitions.
First-order effects
- Google will dispose of its entire 6.5 percent Clearwire stake for $47 million, realizing a steep loss against its original $500 million investment.
- Clearwire’s shares will move from Google to a new holder, ending Google’s direct equity position in the company.
Second-order effects
- The sale weakens Clearwire’s connection to a major early technology partner as it continues to depend on external financing, following its enlarged 2011 stock offering.
- For Google, the disposal narrows the financial exposure attached to its earlier effort to shape the wireless-access ecosystem through investments and spectrum policy.
Third-order effects
- The episode highlights the deployment-risk problem in network infrastructure: strategic technology investors can help launch a model, but may retreat when capital requirements and returns diverge.
- If comparable exits persist, wireless-network builders will be pushed toward investors prepared to fund long deployment cycles rather than partners seeking broader platform leverage.
The trend: Strategic investment in wireless infrastructure is giving way to sharper scrutiny of the capital intensity and payoff of network deployment.