Why Clearwire Plunged

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) have plunged today by as much as 20% after Verizon (NYS: VZ) said it was selling some of its spectrum.

So what: Big Red is putting up some of its wireless spectrum in the 700 MHz frequency band as it hopes to gain regulatory approval to buy a different slice of spectrum from cable operators. Adding to the availability of wireless spectrum could reduce the value of other holders of spectrum like Clearwire and DISH Network (NAS: DISH) .

Now what: Both Clearwire and DISH are feeling selling pressure on the news, as their respective spectrum holdings comprise a sizable chunk of their value. At the end of last year, Clearwire valued its spectrum holdings at almost $4.3 billion -- nearly 49% of its total assets on the books. The company already has more than $4 billion in long-term debt. It's a real danger if the company's largest asset should take a hit.

Interested in more info on Clearwire? Add it to your watchlist by clicking here.

At the time thisarticle was published Fool contributorEvan Niuowns shares of Verizon Communications, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool has adisclosure policy.
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