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.
So what: Sprint, which is already Clearwire's biggest customer and investor, disclosed that it was buying sufficient shares from Eagle River Holdings to boost its stake from 48%, to 50.4%, crossing the important 50% threshold that would make it a majority owner. That will allow Sprint to control the board, and subsequently have more say over its spectrum holdings.
Now what: The past week has been a rollercoaster for Clearwire, soaring to new highs on hopes that the company would be fully acquired after Sprint's deal with Softbank, only to plunge, and give back those gains when that speculation cooled off. That's the theme of today's drop, as well, as Sprint's move is a clear indication that it only wants a bigger piece of Clearwire, and not the whole thing. A Clearwire buyout is still a distinct possibility, but it doesn't look like it'll be any time soon.
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The article Why Clearwire Shares Plunged originally appeared on Fool.com.Evan Niu, CFA has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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 Motley Fool has a disclosure policy.