Did We Just Hear Clearwire's Death Knell?

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If you sold Clearwire (NAS: CLWR) shares short at their absolute peak today and then covered at the very bottom, you've collected a 41% gain. I'd have to congratulate you not only on superhuman market-reading skills, but also on your robot-like timing: The peak prices lasted less than a minute, immediately followed by the day's bottom -- and that was gone within 10 minutes.

I dare say that nobody pulled that majestic trade today. If you shorted Clearwire at Wednesday's closing prices instead, you could cash in right now for a 27% overnight profit. That's not small potatoes, and a much easier feat to perform. Over half of Clearwire's free float was shorted as of mid-July despite a 65% year-long slide leading into this second-quarter report, and even deeper discounts if you go further back in time. And for good reason, I might add.

The 4G networking provider reported 151% year-over-year revenue growth and a sequentially smaller negative EBITDA. Clearwire has 7.65 million subscribers now, mostly through its longtime partnership with largest shareholder Sprint Nextel (NYS: S) and up from just 1.6 million a year ago.

And that's where the good news ends.

Clearwire now plans to adopt the LTE high-speed wireless standard in addition to the WiMax technology it uses today. The company needs to find another $600 million to fund that expansion, on top of the $300 million it needs to complete its WiMax plans. And Sprint seems unwilling to add any funds to that pot, instead opting to ink a 15-year LTE agreement with independent LTE operator LightSquared.

That's a stab deep in Clearwire's aching heart; Telecom titans Verizon (NYS: VZ) and AT&T (NYS: T) are setting up for a final showdown, where Sprint and other minor characters hardly play a part. Abandoning your longtime next-generation strategy in favor of another upstart at this crucial crossroads is like Juliet dumping Romeo in favor of Count Paris -- or perhaps his unknown cousin.

All of this drama is evident in Clearwire's report and the ensuing conference call. Some optimistic analysts see this as a perfect opportunity to buy Clearwire and profit as the stock bounces off the bottom. Other pundits, myself included, only hear the steady beat of drums as the company marches off a cliff.

Clearwire might raise enough debt to become an LTE player, but then it'd be a small, underfunded, and very lonely one. Or it could be stuck with a WiMax technology nobody wants and Clearwire itself can hardly afford to complete. It's a lose-lose situation.

Was this report an unmitigated disaster, or a signal to load up the truck with Clearwire shares? You know where I stand, but feel free to discuss the matter in the comments box below.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here.Motley Fool newsletter serviceshave recommended buying shares of AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. You can check outAnders' holdings and a concise bio, follow him onTwitterorGoogle+, or peruseour Foolish disclosure policy.

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