Why MetroPCS and Leap Wireless' Shares Jumped

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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 wireless service providers MetroPCS (NYS: PCS) and Leap Wireless (NAS: LEAP) were ringing up big gains today, with both stocks up more than 20% at one point, as takeover rumors hit the newswires.

So what: According to Bloomberg, Deutsche Telekom may be prowling the deal circuit again with its T-Mobile USA unit following its ill-fated proposed tie-up with AT&T (NYS: T) . In an effort to gain size and clout in the cutthroat wireless services industry, the company may be interested in merging the T-Mobile unit with the smaller MetroPCS. Based on Bloomberg's coverage, Deutsche Telekom still seems to be keeping many options open, including looking at combinations with other carriers like Leap Wireless and Sprint Nextel (NYS: S) , selling T-Mobile USA outright, or offering the unit to investors in an initial public offering.


Now what: Should Deutsche Telekom come through with an offer for MetroPCS, it would have to provide a premium price to entice investors to sell -- and that is exactly what buyers today are counting on as they excitedly push shares up. But buying on takeover rumors is a tough game that can easily lead to heartbreak if no deal ever materializes. This Fool's view is that speculation like this should be left to gamblers.

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At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer owns shares of AT&T, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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