Clearwire Shares Plunged Again: What You Need to Know
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: This has to be getting tiresome. After big declines in June, July, and August, shares of Clearwire (NAS: CLWR) closed down another 11%. This time, worries over the cost to bring Apple's (NAS: AAPL) iPhone to its parent carrier, Sprint Nextel (NYS: S) , appears to have caused the selloff.
So what: Like a climber stuck in an avalanche, investors sold on fears that fresh commitments to Apple could leave Sprint unable to provide additional financing to cash-strapped Clearwire.
Now what: It's a fair concern. The WiMAX specialist's debt is virtually equal to equity and 50% of total capital as of this writing, a structural weakness that begs for help that Sprint isn't in a position to provide. Do you agree? Would you buy shares of Clearwire at current prices? Please weigh in using the comments box below.
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