Why Clearwire Shares Tumbled
Sep 18th 2012 4:53PM
Updated Sep 18th 2012 4:58PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Fourth-generation wireless broadband service provider Clearwire (NAS: CLWR) appears to have again lost connection with investors, down as much as 12%, after Time Warner Cable (NYS: TWC) announced it'd be selling its stake in the company.
So what: Time Warner Cable purchased a stake in Clearwire in 2008 for $550 million. That stake, 7.8% of outstanding shares, is worth just a paltry $73 million today. It now appears that Time Warner Cable is going to expand its 4G LTE partnership with Verizon (NYS: VZ) and is perfectly comfortable jettisoning its Clearwire stake at a loss.
Now what: Clearwire can't seem to catch many breaks. Last week, Clearwire did announce a 4G wholesale agreement with EarthLink (NAS: ELNK) , but beyond this deal, it's just been one bad announcement after another. Sprint Nextel (NYS: S) , despite buoying Clearwire with upwards of $2 billion in investments, has spurned the company in favor of other LTE possibilities. Also, there's that little bit about Clearwire's $2.9 billion in debt that comes due in 2015. Unless Clearwire puts a yard sale sign up for its spectrum, I don't see how it will survive.
Craving more input? Start by adding Clearwire to your free and personalized Watchlist so you can keep up on the latest news with the company.
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