
Note 3.	Investments

The components of investments were as follows:



	March 31, 2012		December 31, 2011
	(in millions)
Marketable equity securities	$	54	$	43
Equity method and other investments	1,726		1,953
	$	1,780	$	1,996

Equity Method Investment in Clearwire

Sprint's Ownership Interest

Sprint's investment in Clearwire Corporation and its consolidated subsidiary Clearwire Communications LLC (together, "Clearwire") is part of our plan to participate in the fourth generation (4G) wireless broadband market. Sprint offers 4G products utilizing Clearwire's 4G wireless broadband network in available markets. As of March 31, 2012, Sprint held approximately 50.0% of a non-controlling economic interest in Clearwire Communications LLC and a 47.1% non-controlling voting interest in Clearwire Corporation (together, “Equity Interests”) for which the carrying value totaled $1.4 billion.

In addition to our Equity Interests, Sprint holds two notes receivable from Clearwire as of March 31, 2012. On January 2, 2012, in conjunction with new long-term pricing agreements reached between the two companies in the fourth quarter of 2011, Sprint provided $150 million to Clearwire in exchange for a promissory note. The note has a stated interest rate of 11.5% that matures in two installments of $75 million plus accrued interest in January 2013 and in January 2014. The difference between the fair value of the note and its face value has been recorded as a prepaid expense, which will be amortized over the term of the note to cost of service. Sprint, at its sole discretion, can choose to offset any amounts payable by Clearwire under this promissory note against amounts owed by Sprint under the mobile virtual network operator (MVNO) agreement. Additionally, Sprint holds a note receivable from Clearwire issued in 2008 with a fixed interest rate of 12% and a maturity date of December 2015. The total carrying value of the notes receivable, which includes accretion related to premiums for both notes and fees associated with the 2009 replacement of the 2008 note, was $309 million and $178 million as of March 31, 2012 and December 31, 2011, respectively. The carrying value of Sprint's Equity Interests, together with the long-term portion of the carrying value of the notes receivable, are included in the line item "Investments" in Sprint's consolidated balance sheets. The current portion of the carrying value of the notes receivable is included in the line item "Prepaid expenses and other current assets" in Sprint's consolidated balance sheets.

Equity in Losses and Summarized Financial Information

Equity in losses from Clearwire were $290 million and $418 million for the three-month periods ended March 31, 2012 and 2011, respectively. Sprint's losses from its investment in Clearwire consist of Sprint's share of Clearwire's net loss and other adjustments, if any, such as non-cash impairment of our investment, gains or losses associated with the dilution of Sprint's ownership interest resulting from Clearwire's equity issuances, and other items recognized by Clearwire Corporation that do not affect Sprint's economic interest. Sprint's equity in losses from Clearwire for the three-month periods ended March 31, 2012 and 2011 include charges of approximately $40 million and $92 million, respectively, which are associated with Clearwire's write-off of certain network and other assets that no longer meet its strategic plans.

Summarized financial information for Clearwire is as follows:



	Three Months Ended
	March 31,
	2012			2011
	(in millions)
Revenues	$	323		$	237
Operating expenses	(745		)	(884		)
Operating loss	$	(422	)	$	(647	)
Net loss from continuing operations before non-controlling interests	$	(561	)	$	(793	)
Net income (loss) from discontinued operations before non-controlling interests	$	1		$	(41	)

Sprint's Recoverability

At each financial reporting measurement date, we evaluate the excess, if any, of Sprint's carrying value over the estimated fair value of our investment in Clearwire to determine if such excess, an implied unrealized loss, is other-than-temporary. Our evaluation considers, among other things, both observable and unobservable inputs, including Clearwire's market capitalization, historical volatility associated with Clearwire's common stock, the duration of a decline in Clearwire's average trading stock price below Sprint's carrying value, potential tax benefits, governance rights associated with our non-controlling voting interest, and our expectation of the duration of our ongoing relationship, as well as other factors. As of March 31, 2012, Clearwire's closing stock price of $2.28 per share over the carrying value of Sprint's investment in Clearwire of $1.99 per share was equivalent to an excess of $204 million, prior to consideration of any potential tax benefits and governance rights associated with our non-controlling voting interest. Based upon the evaluation of factors described above, we believe that as of March 31, 2012 the carrying value of our investment, including our notes receivable, is recoverable. The determination of an estimate of fair value for a non-public security, such as our non-controlling voting interest, is subject to significant judgment and uncertainty.

Clearwire Related-Party Transactions

Sprint's equity method investment in Clearwire includes agreements by which we resell wireless data services utilizing Clearwire's 4G network. In addition, Clearwire utilizes the Sprint network to provide dual-mode service to its customers in those areas where access to its 4G network is not yet available. Amounts included in our consolidated balance sheets related to our agreement to purchase 4G services from Clearwire as of March 31, 2012 and December 31, 2011 totaled $51 million and $5 million, respectively, for prepaid expenses and other current assets and $155 million and $77 million, respectively, for accounts payable, accrued expense and other liabilities. Cost of services and products included in our consolidated statements of comprehensive loss related to our agreement to purchase 4G services from Clearwire totaled $105 million and $46 million for the three-month periods ended March 31, 2012 and 2011, respectively.