Sprint, Clearwire rise on report of new investment

AP News
|
Posted: Nov 09, 2009 2:17 PM

Shares of Sprint Nextel Corp. and Clearwire Corp. gained Monday after a published report suggesting Sprint and its partner investors will put at least another $1.5 billion into Clearwire.

The Wall Street Journal reported Monday that Sprint, which is Clearwire's majority share holder, is investing $1 billion more, while a group including Comcast Corp., Intel Corp., Time Warner Cable Inc. and Bright House Networks LLC is picking up the rest. Google Inc., another investor in Clearwire, is not putting in more money, the Journal reported.

The joint venture is aimed at building out a high-speed "4G," or fourth-generation, wireless data network based on technology known as WiMax.

Investors cheered the move, sending Sprint up 32 cents, or 11 percent, to $3.17 in afternoon trading, while Clearwire rose 34 cents, or 5.2 percent, to $6.84.

In a note to clients, Stifel Nicolaus analyst Christopher King said the latest round of financing will probably not cover all of Clearwire's cash needs over the next few years. He expects the company to lose several billion more dollars.

But he added that "Clearwire needs to build out its nationwide network as quickly as possible, as both Verizon and AT&T will begin to quickly catch up with what we believe will likely be a superior 4G network."

Clearwire's second-quarter loss, though narrower than a year earlier, came to $73.4 million. The company reports third-quarter results after the closing bell Tuesday.