(Adds analyst comment and background)
By Yung Kim
NEW YORK, March 7 Wireless broadband network
company Clearwire Corp., founded by cell phone sector pioneer
Craig McCaw, raised $600 million with an increased initial
public offering on Wednesday that was priced at the top of a
Despite investor unease since last week's big stock-market
sell-off, demand for the first major IPO since then was hot,
due in large part to McCaw's involvement, said Scott Sweet,
managing director for IPO research firm IPOboutique.com.
McCaw previously served as chairman and CEO of McCaw
Cellular Communications Inc., which he sold to AT&T Corp. in
1997 for $11.4 billion.
"McCaw has a track record and has the benefit of being both
exceptionally tech savvy and fiscally adept at running
companies that require a lot of start-up funding," Sweet said.
"People are betting on Craig McCaw."
The 24 million shares of Class A stock, which was increased
from 20 million shares, sold for $25 per share compared with a
$23 to $25 forecast, according to an underwriter.
Based in Kirkland, Washington, the company will have two
classes of stock. Each share of Class B is convertible to one
Class A share, but will have 10 times the voting rights as a
Class A share, according to an amended offering document filed
with the U.S. Securities and Exchange Commission.
The offering price gives the company an initial market
capitalization of more than $3.9 billion.
McCaw, who is chairman and co-chief executive, is the
largest shareholder with 65.4 percent of the company's Class B
stock and he will have 24.8 percent of the Class A stock after
Clearwire builds and operates wireless broadband networks
with WiMAX, a next-generation technology that offers the
data-transfer speed of a broadband connection without a
The company offers its service in a limited number of areas
in the United States. However, the company bought the rights to
2.5 GHz spectrum from AT&T (T.N) for $300 million in February
in an effort to expand its reach.
McCaw founded Clearwire in October 2003, and the company
entered its first market in August 2004. As of Dec. 31,
Clearwire offered services in 34 U.S. markets, Belgium and
The company plans to use net proceeds from the offering for
market and network expansion, spectrum acquisitions and general
corporate purposes, according to the SEC filing.
The company lost money in 2006, according to year-end
financial statements listed in IPO documents, and WiMAX
technology still lacks broad consumer acceptance.
The company also faces potential competition from Sprint
Nextel Corp. (S.N), which is investing $3 billion in its own
WiMAX network in 2007 and 2008.
However, chipmaker Intel Corp. (INTC.O), Motorola Inc.
MOT.N, the world's second-biggest handset maker, and others
have already bought into the company, investing about $1.1
billion in Clearwire.
Intel and Motorola are expected to broaden WiMAX uses to
mobile phones and other portable devices.
Intel will hold 26.4 percent of Clearwire's Class A stock
and 34.6 percent of its Class B shares after the offering.
Motorola will have 12.9 percent of Class A stock after the
offering while Bell Canada BI.TO will hold 10 percent,
according to the SEC filing.
"The investment by Motorola and Intel was a broad
endorsement of the company," Sweet said.
Merrill Lynch & Co., Morgan Stanley and JPMorgan led a
group of 10 underwriters, which will have the option to buy
another 3.6 million shares of Class A stock to cover
over-allotments, according to an underwriter.
The company intends to list on the Nasdaq under the symbol