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Intel to Cut Its Stake in Clearwire

Intel Corp. (Nasdaq: INTC) plans to rid itself of up to 10 million shares of wholesale WiMax provider Clearwire LLC (Nasdaq: CLWR), the chip giant's Intel Capital investment group revealed Thursday in a regulatory filing.

Intel owns 10 percent of Clearwire as a strategic investor, with 36.8 million Class A shares and 65.6 million Class B shares. The company said its divestiture is part of a periodical rebalancing of the company's equity portfolio "based on Intel's goals, the performance of stocks in its portfolio, and its evaluation of market conditions."

Indeed, this is the second time it has shed some shares. In 2009, Intel took a $950 million charge to write of part of the value in its Clearwire holdings as the company struggled to get off the ground. As it was in 2009, Intel is again maintaining its commitment to WiMax and says the share sale doesn't affect any of its business arrangements with Clearwire. (See CES: Intel – We 'Still Believe in WiMax'.)

Shares of Clearwire dipped following the news, off 10 percent in early trading Thursday.

Why this matters
Intel's decision to reduce its stake in Clearwire could be because the WiMax service provider is plotting a transition to Long Term Evolution (LTE), surmises Mizuho Securities USA Inc. analyst Michael Nelson.

"We believe Clearwire is likely to come to an agreement with Sprint that includes a network expansion based on LTE technology," Nelson wrote in a research note. "As Clearwire transitions away from WiMAX, the company's strategic value to Intel diminishes, in our view."

Sprint Corp. (NYSE: S) still owns 50 percent of the WiMax company and recently pumped more funding into it. It is also expected to close a deal with LightSquared for LTE, but Mizuho's Nelson believes Clearwire is too strategic to Sprint to fail, and says a network sharing agreement between the two, which may include an equity investment by Sprint, is imminent. (See Sprint Gives Clearwire $1B Boost and Sprint/LightSquared Deal Expected Soon.)

For more
Clearwire has been strapped for cash and losing executives in the past year, but things have been looking up following Sprint's cash infusion and rising rates for use of its network. Here's more:



— Sarah Reedy, Senior Reporter, Light Reading Mobile

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