Market Commentary and Intraday News

Clearwire shares fall on analyst downgrade

271 days ago

(AP:LOS ANGELES) Shares of cellphone infrastructure company Clearwire Corp. fell on Wednesday after an analyst cut his rating on the company, saying a doubling of the stock price since late July took it too far above his $1 target price.

THE SPARK: RBC Capital Markets analyst Jonathan Atkin on Wednesday cut his rating on Clearwire to "Underperform" from "Sector Perform."

He said that the recent rise in the share price wasn't justified given the current risks facing the company. He said it has few prospects in the near future to sell its wireless spectrum, which can be used for next-generation cellphone networks.

He also noted that Sprint Nextel Corp., Clearwire's majority owner, is making solid progress building out its own "4G" network.

Sprint is Clearwire's largest customer, but it has said it will stop making devices that work on Clearwire's network by the end of the year.

THE BIG PICTURE: Analysts value Clearwire mainly for its spectrum, which is space on the airwaves required to operate a wireless cellphone network. That means its fortunes hinge largely on a sale of that spectrum, rather than its ability to operate as a company.

THE ANALYSIS: Atkin said Clearwire faces several threats to a sale of its spectrum. For one, Dish Network Corp. has unused spectrum it could lease or sell to carriers such as AT&T. Sprint could also bid to acquire more spectrum if it buys smaller carriers like MetroPCS and Leap Wireless. Third, Verizon Wireless plans to sell some of its spectrum, which could reduce demand for Clearwire's.

SHARE ACTION: Shares closed down 16 cents, or 9 percent, at $1.64 on Wednesday. They have nearly doubled from a 52-week intraday low of 83 cents reached on July 24.

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