Cash-strapped Clearwire says no disagreement prompted McCaw's resignation. The company's survival is now in question as it struggles to build a nationwide high-speed wireless 4G network
(Bloomberg) — Clearwire Corp., a company creating a nationwide high-speed wireless network using WiMax technology, said Chairman Craig McCaw will step down today.
McCaw, a 61-year-old pioneer of the mobile-phone industry, informed Kirkland, Washington-based Clearwire on Dec. 29 that he was leaving, according to a filing yesterday. The decision wasn't the result of any disagreement, the company said.
McCaw's resignation raises concerns about the fate of Clearwire, said Michael Mahoney, senior managing director for Falcon Point Capital LLC. The company has struggled to raise enough funding to build out and operate its network, forcing it to cut jobs and put off projects.
"He is Clearwire," Mahoney, who doesn't own shares in the company, said in an interview. "So you sort of think, 'Geez, are they going under?' There's also a possibility that whoever saves them will want the chairman position."
In November, Clearwire said it may run out of cash as early as mid-2011. It also announced plans to cut 15 percent of its workforce, and reduced sales and marketing spending. The company got a lifeline in early December, when it sold $1.325 billion of bonds and exchangeable notes in a three-part offering.
"This really gives us the runway that we were looking to in terms of funding our operations," Erik Prusch, chief financial officer for the company, said in a Dec. 6 call with investors. Clearwire also is considering selling some airwaves, or raising money from existing or outside investors, he said.
Sprint Nextel Corp., Google Inc., Time Warner Cable Inc., Comcast Corp., Intel Corp. and other investors pumped $3.2 billion into Clearwire in 2008, seeking to create a fourth- generation wireless network. Several of those investors also contributed to a $1.56 billion funding round last year, when Clearwire was short on cash.
Sprint, seen as a potential acquirer of the company, said this month that it has no plans to take that step. Scott Sloat, a spokesman for Sprint, declined to comment yesterday.
Clearwire is still on track to reach its goal of creating a nationwide 4G network, McCaw said.
"Today, with a 4G network covering one-third of the U.S. population and serving nearly 3 million customers, including those from some of the leading names in telecommunications, Clearwire is well on its way to realizing that vision," he said in an e-mailed statement.
Clearwire rose 8 cents, or 1.6 percent, to $5.22 on the Nasdaq Stock Market yesterday. The shares have lost 23 percent of their value this year.
McCaw was nominated to the position by Eagle River Holdings LLC, one of Clearwire's biggest shareholders. Eagle River has the right to nominate a director to replace McCaw and intends to choose Ben Wolff, according to the filing. Wolff, who was a co- chairman of Clearwire until early 2009, is chief executive officer of ICO Global Communications Holdings Ltd.
"Craig McCaw's vision, guidance and influence helped Clearwire develop into the 4G leader the company is today," Susan Johnston, a spokeswoman for the company, said in an e- mail. "We thank him for his immeasurable contributions, and believe that Ben Wolff's long affiliation with Clearwire and Eagle River will offer continuity and have an immediate impact at this key point in the company's development."