Clearwire Shares Jumped: 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  ) opened Monday trading up 13% on a report by Bloomberg that Sprint (NYSE: S  ) is in talks with cable companies including Comcast (Nasdaq: CMCSA  ) to purchase the WiMAX operator outright.

So what: If the deal goes through, Sprint and Comcast -- already investors in Clearwire alongside Time Warner Cable (NYSE: TWC  ) and Bright House Networks LLC -- will be able to upgrade the beleaguered company's high-speed network more efficiently in order to compete against the likes of AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) . Unfortunately, Clearwire has sold off quickly since the opening spike (up only 2% at the time of this writing), while Sprint is down 4%, suggesting that Mr. Market doesn't think the talks are that substantial.

Now what: I wouldn't jump into the shares just yet. As several industry analysts have pointed out, speculation of some sort of a cable/Sprint deal has existed for quite some time now, so the Bloomberg report alone isn't much of a reason to get excited about Clearwire. Fools know never to buy a stock based purely on buyout buzz, but when a company is as cash-strapped and debt-ridden as Clearwire is, it's especially important.

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

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of AT&T. Try any of our Foolish newsletter services free for 30 days.

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 Fool's disclosure policy always gets a perfect score.


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