Shares of Clearwire (NASDAQ: CLWR) hit a 52-week high yesterday. Let's look at how it got here and what the future has in store.
How it got here
The big news yesterday was that Clearwire's biggest customer and investor Sprint Nextel (S +0.00%) is hooking up with Japan's Softbank in a $20.1 billion deal that would give Softbank a 70% stake in Sprint. That included $8 billion in new capital to shore up Sprint's balance sheet and help fund its network expansion.
Sprint wasn't required to take any action regarding Clearwire for its deal with Softbank to proceed, but that didn't stop speculation that the smaller company would soon be acquired. CNBC even reported that Sprint was working to acquire Clearwire, further fueling the speculative flames and sending shares soaring.
Today, Bloomberg is saying that Sprint doesn't have any immediate plans to take over Clearwire, as it will be focusing on closing the Softbank deal, which could easily take upwards of six to eight months. Sprint already paid Clearwire $900 million to use its spectrum through 2013 so it has no immediate need to make a move. Tossing cold water on the takeover hopes has caused Clearwire to give back almost all of the gains it saw yesterday.
How it stacks up
Let's see how Clearwire compares to other carriers.
We'll include some fundamentals, too.
|
Company |
P/S (TTM) |
Net Margin (TTM) |
Debt/Equity (MRQ) |
Assets/Equity (MRQ) |
|---|---|---|---|---|
|
Clearwire |
0.9 |
(48.7%) |
4.47 |
8.9 |
|
Sprint |
0.5 |
(11.1%) |
2.27 |
5.31 |
|
AT&T (T 0.83%) |
1.6 |
3.5% |
0.59 |
2.58 |
|
Verizon (VZ +0.21%) |
1.1 |
2.5% |
1.25 |
6.09 |
Source: Morningstar. TTM = trailing 12 months. MRQ = most recent quarter.
AT&T and Verizon continue to dominate the wireless sector, but the deal gives Sprint a better shot at competing with them. AT&T and Verizon are also much further along with their respective LTE network build outs. Sprint and Clearwire both have heavier debt burdens on their balance sheet, and Sprint CEO Dan Hesse said the deal would put his company's debt-to-equity ratio on par with Ma Bell and Big Red.
What's next?
It remains a distinct possibility that Clearwire could get acquired eventually, but it seems that possibility would happen later rather than sooner. It has a lot of valuable spectrum holdings and is deploying the same flavor of LTE that Softbank uses in Japan.
