UPDATE: Clearwire Corp Opens 9% Post IPO

NEW YORK -(Dow Jones)- Wireless broadband company Clearwire has shrugged off jittery share markets, opening 9% above its issue price on its first day of trading as a public company.

The company's stock opened up at $27.25 a share on the Nasdaq Stock Market on Thursday, compared to its initial public offering price of $25 a share. Shares were recently trading at $25.59.

Strong investor demand resulted in the Kirkland, Wash., company selling 24 million shares, four million more than it had originally planned.

The shares were sold at the high end of the expected price range of $23 to $25 a share, set by underwriters Merrill Lynch, Morgan Stanley and JP Morgan Chase.

Clearwire, a wireless internet-service provider founded by cellular pioneer Craig McCaw, raised $600 million.

It makes the IPO the third-largest so far this year, behind in-theater advertising firm National CineMedia's $798 million offer and hedge-fund Fortress Investment Group LLC's $635 million offer.

Clearwire is the first company to go public since Rosetta Genomics coincided its debut with a 3.3% plunge in the Dow Jones Industrial Average last Tuesday.

Another biotech stock, OncoGenex Technologies Inc. has since shelved its IPO, but a strong performance by Clearwire could help restore investor confidence in the IPO market after last week's weakness on global markets.

Providing its services through the wireless broadband technology known as WiMAX, Clearwire's network is deployed in 34 domestic markets.

The company also offered wireless broadband services in Belgium and Ireland.

At the end of last year it had attracted 206,200 subscribers.

Driving interest in the four-year-old company is not only McCaw, who famously sold his cellular business, McCaw Cellular, to AT&T in 1994 for more than $11 billion, but the company's key investors.

Clearwire has attracted backing from some of the biggest companies in the industry - Intel, Motorola and Bell Canada - worth a combined $1.1 billion.

"This not only shows strong endorsement of the products Clearwire is pursuing, but also these three major corporations' belief that their return on investment will be strong," said Scott Sweet, managing director of IPOboutique.com, an IPO research service near Tampa.

Post IPO, McCaw and Intel's voting stake in Clearwire will be 49% and 30%, respectively. Motorola will have 4% and Bell Canada 3.1%.

Despite the high-profile investments, the start-up is heavily in debt. At the end 2006, its total debt stood at $756 million while the company reported a net loss for the year of $284 million.

But Sweet noted that McCaw "has an excellent track record in obtaining additional financing when appropriate".

"At the close of this offering, Clearwire will have about $1 billion in cash. This however will likely need to be replenished within 12 months. Mr. McCaw is not only a legendary technological pioneer, but very shrewd fiscally," he said.

Also driving interest in Clearwire is its position as the second-largest holder of spectrum in the 2.5GHz band in the USA.

It recently expanded upon that with the purchase of all of the 2.5GHz spectrum held by AT&T for $300 million.

Looking forward, Clearwire has joined forces with Intel to develop and market a mobile WiMAX network as a co-branded service available only over Clearwire's mobile WiMAX network in the U.S..

However, its attempt to build networks and grow its subscriber base will come at a cost. Clearwire warned that its expansion will more than likely be accompanied by significant operating losses over the next five years or more.

Clearwire said it intends to use the proceeds of its offer for market and network expansion, spectrum acquisitions and general corporate purposes.

-By Yvonne Ball, Dow Jones Newswires; 201-938-5289; yvonne.ball@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 8th March 2007