Clearwire Plunges as Sprint Says Accord May End After 2012

Clearwire Corp. (CLWR), the money-losing wireless broadband provider, plunged 32 percent after Sprint Nextel Corp. (S) signaled it may end the companies’ partnership after the current accord ends in 2012.

Clearwire, which is majority owned by Sprint, fell 66 cents to $1.39 in New York trading today. It was the largest drop since November 2008.

Sprint, which uses Clearwire’s WiMax network to offer high- speed services, said at an investor conference today that it will stop selling WiMax devices after 2012 as it focuses on a technology called long-term evolution, or LTE. Sprint, which accounts for most of Clearwire’s wholesale revenue, is building out its own LTE network and also has a partnership with LTE carrier LightSquared Inc.

While Clearwire also plans to shift toward LTE, it has yet to gain funding for the network upgrade. Sprint Chief Executive Officer Dan Hesse said the carrier may extend its relationship with Clearwire beyond the end of next year, without committing to provide Clearwire money to shift to LTE.

“We signed an agreement which takes us through 2012 already,” Hesse said today in interview at an investor meeting in New York. “We are hopeful we can extend and expand that.”

Clearwire has said that it needs about $600 million for LTE plus $350 million in working capital. The Kirkland, Washington- based company’s stock had lost 60 percent this year before today partly on concern the company will struggle to gain the funding it needs to make the shift.

Sprint ‘Distancing Itself’

Clearwire Chief Executive Officer Erik Prusch said in an interview he’s confident the company can raise the capital needed. He said the company will be able to monetize its extra spectrum, and Overland Park, Kansas-based Sprint is among the companies that needs it.

“We service the majority of their growth, a majority of their customers,” he said. “Without us, they don’t really have a 4G strategy.”

It sounds like Sprint “is distancing itself from its reliance on Clearwire,” Chris Larsen, an analyst at Piper Jaffray & Co., said in a research note today.

Hesse said that service for Sprint’s wireless customers would continue if Clearwire files for bankruptcy.

“If there were any bankruptcy, we would expect it to be constructive and we would be part of the discussion,” Hesse said. “We feel confident that we would be able to support our 4G wireless customers.”

Prusch said he is “not going to speculate” on the possibility of bankruptcy.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net; Sarah Frier in New York at sfrier1@bloomberg.net

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

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Sprint Nextel Corp. Chief Executive Officer Dan Hesse

Tony Avelar/Bloomberg

Sprint Nextel Corp. Chief Executive Officer Dan Hesse.

Sprint Nextel Corp. Chief Executive Officer Dan Hesse. Photographer: Tony Avelar/Bloomberg