Clearwire Raises Concerns About Intel, Airspan and Alvarion

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Intel Invests in Provider Of Wireless Internet Access

• Summary: Craig McCaw's WiMax network operator Clearwire Corp. has raised $600 million from Intel and another $300 million, including a sale of its NextNet Wireless Inc. hardware business for an undisclosed amount to Motorola. Clearwire also withdrew its plans for an IPO, claiming that strategic deals with Intel and Motorola would have required a re-write of the IPO documents, that the Vonage IPO flop had nothing to do with the decision, and that Clearwire may chose to pursue an IPO in future. Clearwire is believed to be the second largest owner of US spectrum suitable for WiMax and currently sells wireless Internet access in 26 metro markets in the US, Ireland, Belgium, Denmark and Mexico.
• Comment on related stocks/ETFs: Motorola's purchase of NextNet Wireless may increase the competitive pressure on WiMax infrastructure vendors Airspan (AIRN) and Alvarion (ALVR), and is thus incrementally negative for both stocks. Motorola's purchase of the business was no doubt part of a broader partnership, and might kick-start Motorola's entry to the WiMax infrastructure market by locking up potentially the largest US customer. It also provides technology diversification for Motorola. Thus a net positive for Motorola's stock (MOT). Intel's large investment in Clearwire looks confused in light of Intel's sale of its own communications chip business, so probably incrementally negative for its stock (INTC). For more background on Clearwire (CLWR), see key excerpts from its IPO filing and analysis from Jon Ogg and Evelyn Rubin.