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DISH Isn't Serious About Buying Clearwire

When Clearwire (UNKNOWN: CLWR.DL  ) jumped sky-high in the middle of December, I told you not to touch the stock. Majority shareholder Sprint Nextel  (NYSE: S  ) had just plunked down a solid offer to buy the rest of the high-speed data network operator, and a better offer looked nearly impossible. As Stifel Nicolaus analysts put it, "It's Sprint or nobody. At the end of the day, Clearwire's worth what Sprint's willing to pay for it."

But there is another bid on the table today. Not from a rival telecom, but from satellite TV specialist DISH Network  (NASDAQ: DISH  ) . Sprint's offer of $2.90 per share has been topped by a $3.30 bid from DISH.

Clearwire shares jumped 7.8% on the news, but never reached the $3.30 offer level. Investors aren't buying the DISH gambit, and neither should you.

Nobody saw DISH coming, and for good reason. The company is working on a land-based wireless network of its own, the better to deliver next-generation video services and expand its addressable markets to new fields.

That's why it makes some kind of sense to see the company buying an established wireless network rather than relying on regulators to let DISH use satellite-approved radio waves for much stronger land-level signals.

But Clearwire isn't a good choice. The company is simply too deeply entangled in Sprint's operations, and Sprint already owns 51% of the voting shares. In what alternate universe could you imagine Sprint casting the necessary votes to approve a DISH deal, when it means shooting its own plans in the foot?

If DISH is serious about buying tower-bound networking assets, it would be better off in a bidding war with T-Mobile USA for the right to marry MetroPCS  (NASDAQ: TMUS  ) . The Clearwire bid might be a negotiating tactic, designed to shake loose some small portion of the target's physical assets and radio spectrum licenses -- but it simply cannot be a serious play to actually buy the company.

This nearly 8% jump is a fluke, a temporary boon, a freak accident. So sell now if you held your Clearwire shares through the Sprint bid, or forever hold your peace. These prices won't last, and they're not coming back when they're gone.

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  • Report this Comment On January 10, 2013, at 12:39 AM, spokanimal wrote:

    You're analogy is ridicuous...

    ... you didn't even get the price of sprint's bid for clearwire correct in this piece of work.

    Sprint can't consumate squat without a yea vote from more than half of clearwire's minority shareholders and Crest's polling of the major minority shareholders was already establishing that the vote wasn't there.

    Feeding off of that negative sentiment, Dish makes a bid that compels any minority shareholders who were still undecided to join the crowd of shareholders who want to stick it to Dan Hesse after all he's done over the past 2 years to drive clearwire's share price into the toilet.

    Crest, Kellett and Dish are making it clear that if some Japanese guy is going to come to town and snag all that valuable spectrum for mere pennies on the dollar... that anybody with any sense is going to grab any of that that they can and all those ticked-off minority shareholders are going to entertain anybody that even smells like a dirty white knight.

    Just as nobody can grab all of clearwire without going through sprint... sprint and his buddy Son can't grab all of sprint without going through the majority of minority shareholders either...

    ... especially if intel and their multitude of chip business via sprint is recused from the vote by virtue of their control position in all of this.

    Get your head out of the clouds... you have no idea how much clearwire's minority shareholders hate Dan Hesse after all he's put them through...

    ... his deal is already dead.

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