Clearwire Shares Jumped: 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: Shares of Clearwire (NAS: CLWR) opened Monday trading up 13% on a report by Bloomberg that Sprint (NYS: S) is in talks with cable companies including Comcast (NAS: CMCSA) to purchase the WiMAX operator outright.

So what: If the deal goes through, Sprint and Comcast -- already investors in Clearwire alongside Time Warner Cable (NYS: TWC) and Bright House Networks LLC -- will be able to upgrade the beleaguered company's high-speed network more efficiently in order to compete against the likes of AT&T (NYS: T) and Verizon (NYS: VZ) . Unfortunately, Clearwire has sold off quickly since the opening spike (up only 2% at the time of this writing), while Sprint is down 4%, suggesting that Mr. Market doesn't think the talks are that substantial.

Now what: I wouldn't jump into the shares just yet. As several industry analysts have pointed out, speculation of some sort of a cable/Sprint deal has existed for quite some time now, so the Bloomberg report alone isn't much of a reason to get excited about Clearwire. Fools know never to buy a stock based purely on buyout buzz, but when a company is as cash-strapped and debt-ridden as Clearwire is, it's especially important.

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At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of AT&T. 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. The Fool'sdisclosure policyalways gets a perfect score.

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