Clearwire shares: A roller coaster ride

Submitted by Ted Gottsegen on Wed, 01/30/2008 - 20:20

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Financial News

Clearwire Corporation (Public, NASDAQ:CLWR) shares had a great day yesterday jumping $1 after news the Sprint (S) deal was being revisited. Today, the thrill is gone and shares of CLWR are down 17% and falling right back to under $13 a share.

Today, Clearwire Chief Executive Ben Wolff made it official and said the two companies have made progress on terms for a roaming deal for their high-speed wireless networks based on WiMax technology. Wolff went on to say that Sprint and Clearwire are also working on collaborating in other areas, but did not give details. He declined to comment on recent reports speculating that Sprint and Clearwire were looking to merge their WiMax assets with investments from outside companies.

The market could care less, dropping CLWR hard and as shares fall we get closer to the $10.29 52-week low. Fellow Masters, should Clearwire shares continue to fall, we've got ourselves a great buying opportunity.

Wolff said today that Clearwire's preliminary revenue for the fourth quarter coming in at $45 million and a total subscriber base of 394,000, including domestic and international markets.

Chart for Clearwire Corporation (CLWR)

Don't forget that Clearwire's IPO price was $25 last year and now shares are trading at half the value. Back on Jan 3rd Sid Parakh of McAdams Wright Ragen said that Clearwire is not being valued appropriately, and revised the company's price target up to as much as $28 a share.

Parakh wrote that if you added up only the value of Clearwire's spectrum -- or airwaves that it owns -- it would have an estimated value of about $11 to $25 a share.

Why is it undervalued?

That is "essentially implying that the market is unwilling to assign any value to the company's network or growing subscriber base," Parakh said.

Add to it that the Sprint relationship is healing and Wall Street has this stock priced all wrong. Do you really think CLWR won't be able to grow its subscriber base? Come on.

Parakh said that he was told in a recent meeting with Clearwire's chief technology officer that the company was confident of its ability to deploy a mobile WiMax system beginning in mid-to-late 2008. Currently, the company is using proprietary equipment to provide wireless broadband technology. That technology is also considered nomadic, but not mobile, because of limitations to its use while moving.

Think long-term Masters, which is difficult at a time like this but if you are just looking at CLWR shares today and haven't been burned, now is the time to act.