Clearwire Corp. Shares Plunged: What You Need to Know

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: Clearwire Corp. (Nasdaq: CLWR) dropped 10% in intraday trading today after Bloomberg published an article suggesting the company may be facing competitive pressure at partner Sprint Nextel (NYSE: S).

So what: Clearwire sells "4G" wireless network capacity to Sprint. Cellular providers are investing huge sums in 4G, the newest and fastest wireless networking equipment, to get the high-speed capacity needed to support pricy data services for Web surfing on mobile devices such as smartphones and tablets.

Now what: LightSquared Inc. is in talks with Sprint about working together to build out a 4G network. Should this occur, Sprint would be able to play Clearwire off against LightSquared on pricing, and Clearwire could lose a share of Sprint's business. With Clearwire's history of losses and the potential downside risk from competitive pressures, investors need a strong bull counterthesis to like this stock.

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

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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