Clearwire’s Stock Falls Today After Downgrade; Joint-Venture Faces Huge Hurdles


Clearwire (NSDQ: CLWR) shares are tumbling today, following yesterday’s announcement that it has formed a joint venture with Sprint (NYSE: S) and has received a cash infusion of $3.2 billion. The slide is being blamed on a Citi Investment Research report that downgraded Clearwire to “sell” from “hold,” explaining that the shares are trading above fair value, AP reports. In afternoon trading, Clearwire was down $1.72 a share to trade at $14.50. Analyst Michael Rollins wrote in a note to investors that challenges remain for the combined business, ranging from a coverage plan that reaches less than half of the U.S. population by 2010 to an underfunded business plan and competition. Rollins said a fair value is $13. The combined WiMax operations of both companies are expected to trade under “CLWR” and shares are expected to be valued at $20 based on a $14.55 billion valuation. Sprint is also trading down, falling 18 cents to trade at $8.98. Both companies will report Q1 earnings on Monday.

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