Clearwire Shares Plunged: What You Need to Know

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What: Shares of Clearwire (Nasdaq: CLWR  ) have been edging lower throughout the day, currently down 12%, after the company announced plans for a $1.1 billion debt offering.

So what: Clearwire, a company in partnership and majority owned by Sprint Nextel (NYSE: S  ) , had been actively seeking funding before the end of the year in order to continue expanding its wireless network. This funding will take some near-term pressure off of both companies and allow Clearwire to move forward with its plans to challenge Verizon (NYSE: VZ  ) and AT&T (NYSE: T  ) on a national level.

Now what: This debt offering hardly does anything to quell investor fears about Clearwire's ability to move forward. Most Wall Street analysts were looking for a considerably larger amount of financing than $1.1 billion, and it remains to be seen if this will be close to enough to finance the wireless network expansion. I do know this: Clearwire has yet to produce a profit and now finds itself considerably more debt- burdened than it was yesterday. That looks like a long-term recipe for disaster.

Interested in more info on Clearwire? Add it to your watchlist by clicking here.

Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong.

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