Is Clearwire (CLWR) a Dead Cat or Just Dead?

May 14, 2012 11:08 AM EDT
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Shares of Clearwire Corporation (Nasdaq: CLWR) are down close to 70 percent in past year, 40 percent in the past month, and 3 percent today. The sell-off comes as investors worry about the company's ability to maintain as a 'going concern," especially in light of news that another cash-strapped wireless venture LightSquared is on the verge of bankruptcy.

Big investors aren't sticking around to find out the Clearwire's fate. Just last week it was disclsoed that mutual fund giant FMR lowered its stake in the wireless company from 71,365,577 shares, or 15.15%, to 41,436,551 shares, or 8.1%.

Clearwire is playing catch-up to AT&T and Verizon Wireless in rolling out 4G LTE. Clearwire plans to introduce its next-generation 4G LTE network next year. Many industry insiders expected it to dump its branded retail business altogether and adopt a wholesale model, but so far the company is denying this.

Investors are holding out for the best and will look for large holder and partner Sprint (NYSE: S) to ramp up its 4G footprint, especially as Apple's iPhone 5 launch could be huge.

Investors are also holding on as the liquidity concerns may be overblown. The company said it has sufficient cash to fund the near-term liquidity needs of the business until at least March 31, 2013. That said, the company has warned that if the business doesn't perform as expected it may need to raise more money to fund the current business and the deployment of its LTE network. Beyond March 31, 2013, the company believes it will need to raise substantial additional capital to fund its business and meet financial obligations.

What ever the case, the next 6-month will be important to determine the ultimate fate of the company. Some will bet big and either make a killing or lose it all.

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