Craig McCaw, who in 2003 founded U.S. broadband wireless company Clearwire Corp., is stepping down as chairman of the board effective on Friday. According to the Wall Street Journal, Clearwire announced the move late Thursday in a securities filing. (Also see: Clearwire to raise $1.1 billion to ease cash crunch)
McCaw's departure is sure to spark further speculation about Clearwire's financial challenges and business strategy. Earlier this month Clearwire announced plans to raise more than $1.1 billion through the issuance of debt in order to provide the company with enough cash to continue the build-out of its next-generation wireless network. In the third quarter alone, Clearwire reported a net loss of $139 million, or 58 cents a share. Beyond the cash crunch, the WSJ writes, the Kirkland, Wash.-based company faces other problems: Clearwire's relationship with (majority owner) Sprint Nextel has soured this year. Sprint is relying on Clearwire's fourth-generation network to fuel its growth and has provided much of the company's funding. But the partners have feuded over the pace of the network rollout and Clearwire's investment in its own retail operations, which compete with Sprint's. In September, three Sprint executives including Chief Executive Dan Hesse resigned from Clearwire's board after Clearwire raised concerns about whether interlocking directorships could leave companies afoul of antitrust law. Sprint now must decide whether to invest even more in a company 1) with which it has a contentious relationship 2) which is deeply in debt and 3) which no longer has a commanding lead in broadband wireless as competitors such as Verizon close the gap. The WSJ says Sprint has until Monday to decide if it wants to participate in Clearwire's recent debt offering. Was McCaw's departure a pre-requisite for Sprint's participation, or does his exit make Sprint more reluctant to invest further in Clearwire? Or is it all coincidental and irrelevant? I have no idea, though I doubt it's the last option. Shares of Clearwire (NASDAQ: CLWR) were down 7 cents, or 1.34 percent, to 5.15 late Friday morning, while shares of Sprint (NYSE: S) were up 4 cents, or .97 percent to 4.20.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.