2012: A Winning Year for Clearwire

In these waning days of 2011, there's a chill in the air and snow in the forecast. What better time of year to curl up by the fire and ponder: What went wrong with the stocks you picked back in January? What went right? And should you keep these stocks in your portfolio, or go out and find something new?

That's what we aim to do today, as we flip back the calendar, and consider the year that was at Clearwire (UNKNOWN: CLWR.DL  ) .

A few Foolish facts about Clearwire

Year-to-Date Stock Return

73.7%

P/E

Unprofitable

Dividend Yield

None

1-Year Revenue Growth (YTD)

6.9%

1-Year Profit Growth (YTD)

Unprofitable

CAPS Rating (out of 5)

**

Source: Motley Fool CAPS.

What happened at Clearwire this year?
Clearwire entered 2012 as a basket case, but it's exiting the year (and in all likelihood, the stock market) on a high note. When partner Sprint Nextel (NYSE: S  ) inked an alliance with LightSquared to run its 4G cell phone service last year, Clearwire shares dropped 24% in a day, and spent the rest of the year struggling to recover.

Hope returned to Clearwire shareholders in January, when LightSquared failed to obtain FCC clearance for its hybrid satellite and ground station LTE network, giving Clearwire shares a new lease on life. A month later, Google (NASDAQ: GOOGL  ) announced it was liquidating its stake in the company. Combined with poor "earnings" (if you can call continual reports of GAAP losses and cash-burn "earnings"), Clearwire's rally was soon cut short.

And so it went for Clearwire all year long -- down one day, and up the next -- as press releases and rumors of buyouts took the place of what drives the share price of more ordinary companies: profits. Mercifully, that all came to an end last week, when on Thursday, Sprint Nextel announced it would put an end to Clearwire shareholders' misery, and buy the company for $2.1 billion.

Or did it? News that Sprint would acquire the 49% of Clearwire it didn't already own sent the shares up 14% Thursday, and a further 6% Friday. Curiously, this now leaves Clearwire shares selling for more than Sprint has said it will pay for them. Are investors hoping Sprint will up its bid out of the goodness of its heart? Or is there another bidder out there, waiting in the wings? AT&T (NYSE: T  ) or Verizon (NYSE: VZ  ) perhaps? Bueller? Bueller?

It seems unlikely these companies would abandon their own LTE networks in favor of Clearwire, which only Sprint actually uses. But if we've learned one thing about Clearwire this year, it's that hope springs eternal.

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  • Report this Comment On December 17, 2012, at 7:31 PM, spokanimal wrote:

    Sprint spent the last 2 years using it's operational leverage over clearwire to push clearwire's share price to unheard of levels given the net value of their assets. Throughout the past 2 years, sprint has become reliant on clearwire's spectrum and knew that their interests lay in someday acquiring clearwire completely...

    ... so, throughout those 2 years, sprint's goal has been to push expectations at clearwire to a very, very low level... and end up picking up the rest of clearwire for a song.

    If ever there was an example of a big company exploiting and screwing it's minority shareholders by the sheer power of it's operational control over it, this was it. I've never seen conflicts of interest and the lack of fiduciary responsibility more evident in a buyout transaction as I've seen in this one.

    If ever there was probable cause for a class action lawsuit, you can certainly place this one at the top of the heap... there are clearly victims here who had a right to be treated better than cattle being led to slaughter.

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