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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

July 9, 2013 at 5:27 PM

Clearwire CEO out after Sprint, Softbank merger

Just a few years ago, Clearwire was on track to become the next huge tech company in the Puget Sound region, with a stellar lineup of investors, plans for a cutting-edge national network and an enviable stash of wireless spectrum.

Today,  with Sprint closing its $3.5 billion acquisition of Clearwire and about to be acquired by Japan’s SoftBank, its future isn’t so clear. Sprint isn’t saying much about its plans for Clearwire, but it’s letting go the Bellevue company’s chief executive, Erik Prusch.

Clearwire isn’t another Safeco or Washington Mutual. It never grew so big, and its demise was more protracted and predictable. But it’s still a sad ending for the best-funded startup Seattle’s ever seen, a visionary company that lost its lead, burned through its capital and ended up sold for the value of its wireless real estate.

Clearwire was founded in 2003 by Craig McCaw, who had long seen the potential of a fast, wireless broadband service that would leapfrog the performance of the cellular phone networks he pioneered.

Five years later, the company had more than $3 billion on tap from investors such as Intel, Google and Comcast, a major distribution deal with Sprint and plans to grow from 1,700 employees to more than 20,000 nationally.

In early 2010, Sprint used Clearwire’s WiMax technology to offer the first widespread 4G phone service in the U.S.

But building out the network ended up costing too much and taking too long. By late 2010, the company was running short on cash, cutting back on its expansion plans and laying off employees.

Meanwhile, Clearwire’s technological lead was dissipating. Other carriers began offering 4G wireless broadband using LTE technology, which emerged as the standard. Even Sprint moved to LTE last year.

Investors began calling for Clearwire to sell off spectrum in 2011. Then in 2012 Sprint began its takeover bid.

Layoffs continued and now Clearwire has 930 employees, including about 425 in the Puget Sound area.

Overland Park, Kan.-based Sprint declined to discuss its long-term plans for Clearwire but today said that it “expects to maintain an office in Bellevue for the foreseeable future.”

“We are currently assessing the needs of the organization going forward and will communicate those plans to employees as
soon as possible,” Sprint spokesman Scott Sloat said via email.

Erik

Clearwire CEO Prusch (pictured) appears to be the first to go.

Prusch — a software industry veteran who joined Clearwire in 2009 and became chief executive in 2011 — is leaving the company, but will remain in an advisory role for the next few weeks, according to company spokeswoman Susan Johnston. He was formerly chief executive of Borland and vice president of Intuit’s Turbo Tax group.

Sprint may keep a foothold in the area similar to the way AT&T continues to employs thousands in the area, two decades after it bought out McCaw Cellular Communications. Dallas-based AT&T operates a major engineering and testing center and its West Coast headquarters in Redmond.

But Sprint and SoftBank may be heading a different direction. An ominous sign came Monday when SoftBank said that its plans for Sprint include the opening of a new 1,000-person research and development center on the West Coast — in Silicon Valley, not Bellevue.

I wonder how much of Clearwire will be folded into the California offices. That wouldn’t be the best outcome for the Seattle area, but employees may prefer that over relocating to Kansas City.

 

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