Why Clearwire Shares 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 high-speed-mobile wireless broadband provider Clearwire (NAS: CLWR) dipped as much as 11% earlier in the trading session after an analyst downgrade.

So what: Before the opening bell, Jefferies downgraded Clearwire to hold from buy, which is what has been responsible for sending the stock into a tailspin -- at least for today. In addition, a mixture of crippling debt levels and Sprint Nextel's (NYS: S) slow growth rates (Clearwire essentially is tied to Sprint's hip) have put its share price under pressure.

Now what: I usually place little credence in the one-day moves of analyst upgrades and downgrades and would suggest doing the same here as well. Despite being in full agreement with the downgrade, as I find Clearwire's debt level and business prospects to be grim, I feel that nothing has changed materially because of the downgrade; it shouldn't alter your investment thesis on the company.

Craving more input? Start by adding Clearwire to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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