Today after the market close, Dish Network (DISH) announced a $3.30 offer for Clearwire, $0.33 more than the Sprint offer. Sprint called the offer from Dish illusory.
Dish has been accumulating spectrum. Last month Dish won a ruling to convert some satellite spectrum to be used as cell phone spectrum. Both Dish and its competitor Direct TV (DTV) have been attempting to diversify.
Clearwire (CLWR) is a true pot of gold because of the valuable spectrum it owns. As wireless devices continue to proliferate, radio spectrum becomes more valuable. The sad truth is that we cannot make new spectrum; we can only better utilize the spectrum that exists.
Long ago my estimation was that the spectrum owned by Clearwire was worth about $10 per share. Unfortunately, Clearwire took on too much debt in its ill-fated WiMax venture. WiMax technology, at one point promoted by Intel (INTC), is no match for the present day LTE technology.
Clearwire tried to right the ship by attempting to build a nationwide LTE network. Alas, it was not to be as Clearwire’s balance sheet was saddled with too much debt.
I bought Clearwire stock as low at $1.16.and recommended it to my subscribers. I always knew that Sprint had a lot of leverage because of its more than 50% ownership of Clearwire stock and Clearwire’s inability to independently raise funds to finance LTE networks.
The full value of Clearwire’s spectrum was not likely to be realized. There was no doubt in my mind that Sprint would attempt to steal Clearwire at a low ball price. Based on prevailing valuation standards, back on October 12, 2012, I told my subscribers that due to Sprint’s controlling interest, $3.50 to $5.00 offer from Sprint was likely…Read more at Forbes
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