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Clearwire Drops 16% on Intel Plan to Sell 10 Million Shares

Clearwire Corp. (CLWR), the provider of high-speed wireless service, tumbled the most in almost two years after Intel Corp. (INTC) said it would sell up to 10 million shares of the company’s Class A stock.

The share sale “does not affect any contractual obligations or business arrangements between Intel and Clearwire,” Santa Clara, California-based Intel said in a regulatory filing made public yesterday.

While Intel makes chips used in phones that operate on Clearwire’s fourth-generation mobile technology, called WiMax, Kirkland, Washington-based Clearwire has indicated it may switch to a more commonly used standard, known as long-term evolution, or LTE. That transition would make it less valuable to Intel, said Michael Nelson, an analyst at Mizuho Securities in New York, who recommends buying Clearwire shares.

Clearwire is testing LTE and plans to complete the trials by mid-year.

Clearwire became a 4G wireless company in 2008 when Intel, Sprint Nextel Corp. (S) and other investors contributed $3.2 billion in return for shares. Intel owns 102.4 million shares, according to the filing.

Since that time, the unprofitable company has struggled to meet its cash needs as it builds out the new network. The company raised $1.56 billion from investors in 2009 and disclosed in 2010 that it had doubt about its ability to continue as a “going concern” before raising cash in a bond sale.

Clearwire dropped 74 cents, or 16 percent, to $3.99 at 4:29 p.m. New York time in Nasdaq Stock Market trading, the largest decline since August 2009. The company has fallen 23 percent this year.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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