Sprint, Clearwire shares fall after WiMax deal news
NEW YORK (Reuters) - Sprint Nextel Corp (S.N) shares fell as much as 7 percent and Clearwire Corp CLWR.O by as much as 14.8 percent on Thursday, a day after the pair revealed plans to merge WiMax high-speed wireless assets.
Sprint shares were down 37 cents at $8.78 in morning trading and Clearwire stock fell $2.01 to $14.21 after analysts said the value of their joint venture would likely be lower than their $14.5 billion target.
"Being a start-up using evolving technology with an unproven model, we believe a $14.5 billion valuation for the company is too high," UBS analyst John Hodulik said in a research note, referring to the fact that WiMax is a largely unproven technology.
Hodulik also noted that the venture's network coverage was expected to reach only 120 million to 140 million by the end of 2010. There are currently more than 258.5 million cellular subscriptions in the United States.
Both companies, who each are scheduled to report earnings on Monday, had seen a boost to their share prices earlier in the week in anticipation of the WiMax deal.
Sprint shares closed flat on Wednesday after having risen more than 10 percent on Tuesday, the day before the deal was announced. Clearwire stock closed down 1.5 percent on Wednesday after gaining 8.5 percent on Tuesday.
(Reporting by Sinead Carew, editing by Maureen Bavdek)
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