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How Nokia and Clearwire Shook Things Up

http://www.fool.com/investing/general/2012/08/16/how-nokia-and-clearwire-shook-things-up.aspx

Rich Duprey
August 16, 2012

There are one-hit wonders, and then there are those stocks for which the initial big move is only a preview for even bigger and better gains to come.

Today, we take at look at Clearwire (Nasdaq: CLWR  ) and Nokia (NYSE: NOK  ) , two stocks that, despite the incredible volatility in the market, made some of the biggest moves higher during the past month. The wireless service provider jumped more than  60% over the last 30 days, while the cellphone maker soared 46%.

We'll pair those gains with the ratings issued by our Motley Fool CAPS community, where the higher each stock's rating, the greater the CAPS members' faith in that company's ability to keep on beating the market.

A mighty temblor
Sure, even after the remarkable run up in its shares, Clearwire's stock is still depressed. At the end of last year, it briefly traded above $2.60 a share and, two years ago, it was trading for about three times that. Its rally from true penny stock territory, therefore, while notable, must be kept in context.

The WiMax specialist's second quarter adjusted revenues rose 8% from the year ago period to $294 million, as non-GAAP net losses were cut in half, to $0.29 per share. While sales came up a bit short from analyst expectations, the losses weren't as wide as anticipated, so when management raised full-year guidance on both the top and bottom line, the market sallied forth in support of the stock. It was also buoyed by better results at benefactor Sprint (NYSE: S  ) , but wireless carriers have been turning in much better than expected results, so that even Metro PCS (NYSE: PCS  ) was lofted higher.

Clearwire management is confident its business is turning, and can easily sustain itself on the cash and credit already available to it, so it won't need to tap new sources of financing anytime soon. While that heartening statement encouraged investors, one analyst played the role of wet blanket on the party by suggesting that Clearwire's rally was done because the company was unlikely to get any of the proceeds from the new debt offering Sprint priced.

The analyst also didn't think it would find a buyer for its unused spectrum, but others aren't so sure, pointing to AT&T's acquisition of Next Wave as an indication "spectrum at 2.3GHz and above is valuable and has to be part of the conversation."

After the wireless carrier's first quarter report showed an equally strong foundation, I thought it was clear that short sellers needed to rethink their attack on Clearwire. That hasn't changed and, with shares short still about double what they were at the end of January, and days to cover where it was last month, some, at least, are betting that there's little upside from here.

Not CAPS member michaelkm88, who thinks Clearwire will successfully realize the value locked in its unused spectrum -- so long as Sprint doesn't pull out its crutch; but tell me, in the comments section below, if you think the run is