Why Clearwire Shares Popped

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 (UNKNOWN: CLWR.DL  ) rose as much as 12% today on rumors of a potential buyout.

So what: An analyst caused a ruckus today by speculating that Sprint (NYSE: S  ) may make a counteroffer for MetroPCS (NYSE: TMUS  ) , the company that agreed to be bought by Sprint rival T-Mobil. Sprint delayed a filing relating to its SoftBank offer, which spurred the rumor, and the secondary option is that Sprint could buy Clearwire instead.

Now what: None of this is anything more than speculation, so I don't see any reason to change your long-term investment thesis today. If, on the other hand, you were looking to sell shares of Clearwire, this is the perfect kind of pop to get out on. Speculation rarely plays out as investors plan, and in this case, it was MetroPCS that the analyst was speculating about -- Clearwire just went along for the ride.

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


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  • Report this Comment On November 30, 2012, at 4:27 PM, nivegulu wrote:

    CLWR - look at the company's spectrum value:

    http://www.businessweek.com/magazine/content/10_22/b41800353...

    Excerpt:

    "The $5 billion Clearwire will pay its license holders for its spectrum over the next three decades is a bargain compared to what its rivals are paying. (Clearwire's $20 billion valuation of its spectrum may prove to be conservative; J.H. Snider, president of policy think-tank iSolon.org and former research director at the New America Foundation's Wireless Future Program, puts the number closer to $50 billion.) AT&T and Verizon bought their spectrum that can be used for 4G at government auction in 2008, paying a combined $16 billion."

    and that was in 2010 before the exponential boom in mobile devices. So, what could the Enterprise Value of Clear be today? - certainly not $2 pps.

  • Report this Comment On December 02, 2012, at 3:58 AM, nivegulu wrote:

    I really don't know why S would go after crapola like PCS which has no basic intrinsic value. Everyone is going to migrate to the best network which will be proportional to spectrum capacity and the latest tech. tdd-lte. Once N.V is launched the churn from other carriers to S/SB/clwr will be parabolic obviating the need for acquiring junk like leap, pcs etc.

    So, now S is going to buy PCS, and Softbank is going to get [S + PCS] for the same $20.1B when the S/SB deal closes?! - makes a lot of (non)sense to me. Yang in the Yin(g). And by the way as a consequence, Mc... does'nt get "made whole" for the next 3(00) years (talk about "breach of fiduciary duty" towards the common class A in an (un)timely fashion) . And in the meantime CLWR could get taken out completely by someone like msft, aapl, amzn, chl, ctl, t, vz, goog,... right from under S's nose. Then N.V NeVer gets completed ever. "Makes a Whole" (pun intended) lot of sense to me now.

    Also, the DOJ is going to be very (un)happy at approving this merger of {[S+SB+PCS] + 50.8% clwr} from a monopolistic viewpoint?. Looks like Yi.. was long on PCS after the dip (after the DT deal). SEC ......zzzzzzzzzzzzzz?.

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