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 wireless services specialist Clearwire (Nasdaq: CLWR ) soared a whopping 40% today on news of a possible takeover of its parent company Sprint (NYSE: S ) by Japanese mobile carrier Softbank.
So what: Clearwire shares have slid over the past few months as its new high-speed LTE mobile network struggles to gain traction, but today's buyout buzz suggests that Softbank believes its spectrum portfolio is much more valuable than Wall Street thinks. The news also implies that Sprint is unlikely to counter T-Mobile USA's bid for MetroPCS (NYSE: PCS ) , at least in the short-term, sending MetroPCS' shares down about 5% today.
Now what: At around noon, Sprint did indeed confirm the talks with Softbank about a substantial investment. "Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint," the company wrote in a statement. But while it certainly makes sense for the LTE savvy-Softbank to bring Clearwire into the fold, betting on it after today's 40% spike seems particularly risky.
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