Sprint Nextel (NYSE:S) is reportedly considering a spin-off of its WiMax business amid declining profits and subscribers in its core business. There is speculation that Sprint may be looking to acquire WiMax-partner Clearwire (NDAQ:CLWR) and spin-off the two companies to satisfy investors who are skeptical of WiMax and looking for a separation.

Many technologists love WiMax but the project continues to be seen as a massive cash bonfire on Wall Street. Sprint previously announced that it is committed to spend nearly $5 billion over the next three years to complete the wireless network that is expected to have the same coverage area as standard cell phones. Clearwire is also expected to contribute roughly the same amount to finish its national footprint.

However, there are those that are betting on WiMax becoming the new global standard for wireless. Clearwire has an impressive list of large investors, including Intel and Motorola, who have a great deal to lose if the project gets slowed down. A combination of Sprint and Clearwire would not only result in substantial capital savings from synergies but also likely enable financial support from the companies that have a stake in WiMax's success.

In the end, the WiMax spin-off would satisfy Sprint investors who are skeptical but allow investors who are bullish on the new technology to make a pure-play bet on it. Meanwhile, a combination with Clearwire would provide the spin-off with much greater stability and make additional funding from strategic players much easier. Combined, these factors make S a stock worth watching!

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