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Clearwire Shares Slaughtered: 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: Shares of Clearwire (Nasdaq: CLWR  ) plummeted as much as 24% in early trading, and remain down nearly that much as of this writing. The WiMAX network operator got shut out of a deal between LightSquared and Sprint Nextel (NYSE: S  ) .

So what: Sprint gets $9 billion in cash to help run LightSquared's LTE network. Terms also call for the carrier to receive $4.5 billion in credits to buy access to the network, which would, in theory, reduce Sprint's reliance on Clearwire and its rival standard to deliver 4G service, The Associated Press reports. Interestingly, investors hated the terms of Sprint's deal; the telecom's shares slumped nearly 20% on the news.

Now what: Forget for a moment Sprint's newfound love for LightSquared. AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) are winning customers with their LTE-in-training networks, while Boingo Wireless (Nasdaq: WIFI  ) handles high-speed connectivity at more than 300,000 Wi-Fi hotspots around the world. All signs point to decreasing interest in Clearwire's WiMAX offering. Do you agree? Disagree? Let us know what you think using the comments box below.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of IBM at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader. 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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  • Report this Comment On July 28, 2011, at 5:08 PM, spokanimal wrote:

    Regarding your comment:

    "The WiMAX network operator got shut out of a deal between LightSquared and Sprint Nextel (NYSE: S )"...

    ... could you please provide me with a link that substantiates your use of the term "shut out"?

    Sprint is set to announce the details of it's 4G strategy on October 7th... are you privy to what they are going to say?



  • Report this Comment On July 28, 2011, at 7:35 PM, TMFMileHigh wrote:


    Thanks for writing.

    The deal as we know it right now is between LightSquared and Sprint. In the meantime, Clearwire is struggling to get better wholesale pricing from Sprint. Seems to me "shut out" is a perfectly appropriate phrase.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

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