Intel Invests in Provider Of Wireless Internet Access By DON CLARK Wall Street Journal
July 6, 2006; Page A2 http://online.wsj.com/article/SB115214498454699023.html?mod=home_whats_news_us Intel Corp. is investing $600 million in Clearwire Corp., a company led by cellular pioneer Craig McCaw, as part of a $900 million investment that could help spur adoption of a wireless technology called WiMAX. Motorola Inc. said it will contribute an unspecified portion of the extra $300 million going to Clearwire and pay an additional undisclosed sum to buy Clearwire's hardware business. Clearwire, as a result of the cash infusion, withdrew plans for an initial public stock offering that had been expected to raise as much as $400 million. Clearwire, based in Kirkland, Wash., is selling wireless Internet access in 26 metropolitan markets in the U.S., Ireland, Belgium, Denmark and Mexico. The company's service is based on a precursor to WiMAX but has been expected to convert to the newer technology. WiMAX is a longer-range cousin of Wi-Fi, the wireless technology that now comes with many laptop computers. It is expected to deliver service at ranges of one to 10 miles -- compared with around 150 feet for Wi-Fi -- and is being developed for both stationary and mobile Internet access. Unlike Wi-Fi, WiMAX is expected to be used with licensed radio frequencies. Clearwire is believed to be the second-largest U.S. holder of frequencies that are suitable for WiMAX, behind Sprint Nextel Corp. Intel, which already held a small stake in Clearwire, said it hopes the $600 million investment by its venture-capital arm, the largest in that unit's history, could allow Clearwire to deploy WiMAX-based networks faster. "We think that the world needs a global standard for broadband wireless," said Sean Maloney, an Intel executive vice president and general manager of the chip maker's Mobility Group. "What we'd like to do is provide a catalyst to help drive down the cost and increase the speed of deployments." Clearwire's decision to withdraw its stock offering follows a poorly received IPO by Vonage Holdings Corp., an Internet phone service. But Ben Wolff, who shares the chief executive officer title at Clearwire with Mr. McCaw, said market conditions had nothing to do with the move. Rather, he said, the company had been negotiating with Intel and Motorola for some time on deals with strategic importance to Clearwire, which would have required his company's offering documents to be substantially rewritten. He said the company may choose to pursue the IPO again in the future. Mr. Wolff said Clearwire is committed to deploying WiMAX in future markets, but he said it is possible the company may stick to its current technology in some cities where it operates now. The sale of the company's hardware business, NextNet Wireless Inc., will allow Clearwire to focus on what it knows best -- operating wireless services, he said. "The wonderful part of this three-way relationship," Mr. Wolff said, is that Intel, Motorola and Clearwire "will work on evolving the technology in the most efficient means possible." Greg Brown, president of Motorola's networks-and-enterprise business, said acquiring NextNet's technology and personnel will help the communications-equipment company become a bigger player in wireless broadband. "We are excited about NextNet's position," he said. The investment by Intel comes as the big chip maker is unwinding a series of communications investments it undertook during the Internet bubble. Those deals were designed to help diversify Intel from its reliance on selling chips that act as the brains for personal computers and server systems. The more recent investments in Wi-Fi and WiMAX, by contrast, are designed to stimulate demand for laptops and other portables -- generating additional demand for its microprocessors as well as its own communications chips. Eventually, Mr. Maloney said, the company expects one set of communication chips to handle both Wi-Fi and WiMAX, to enable users to remain connected to the Internet as they move around. Jim Breen, a telecom analyst with Thomas Weisel Partners LLC, said Clearwire's decision to forgo an IPO is no surprise, given the influx of cash from Intel. "They really don't need to be in the public markets right now, with that financing in place," Mr. Breen said. "Plus, they avoid the scrutiny of being public." In 2005, Clearwire had a net loss of $140 million on revenue of $33 million, most of which came from the sale of equipment. The company had just over 62,000 subscribers last year, though its service was available to nearly 4.8 million households. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list medianews@twiar.org To unsubscribe send an email to: [EMAIL PROTECTED]
