Clearwire Corp. shares soared after the WiMax service provider's IPO (initial public offering) on Thursday, though later in the day they settled around their initial price.
The successful IPO, which raised about US$600 million, may be a good sign for the emerging wireless broadband technology the company uses to provide Internet access to more than 200,000 U.S. customers.
The company, backed by Intel Corp. and Motorola Inc., serves 35 U.S. metropolitan markets. WiMax has a longer range than Wi-Fi and can deliver higher speeds depending on how bandwidth is allocated. Because it's based on standards, WiMax could become a widely deployed technology that's inexpensive to build into portable devices. Sprint Nextel Corp. plans to use the technology as a complement to its cellular network beginning later this year.
Clearwire's underwriters sold 24 million shares at a price of US$25 per share in the IPO. On Thursday, the stock opened at $27.25 per share, though later in the day it settled around the $25 level.
The Kirkland, Washington, company was founded in 2003 by mobile pioneer Craig McCaw, who started McCaw Cellular in the 1990s and later sold it to AT&T Wireless. Clearwire filed for an IPO last year but withdrew the filing in July after receiving $600 million in funding from Intel Capital. Motorola participated in the same round of funding, which totaled $900 million, and in the process acquired NextNet Wireless Inc., Clearwire's hardware subsidiary.
Part of Clearwire's value comes from its spectrum licenses. Unlike Wi-Fi, WiMax is expected in many cases to be deployed over licensed frequencies. Sprint Nextel holds about 85 percent of the licenses across the country for spectrum in a valuable band around 2.5GHz that can be used for WiMax. The carrier, third-largest in the U.S., has said it expects to reach as many as 100 million people with WiMax by the end of next year.