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Crest Financial has already gone so far as to file a lawsuit in order to stop the deal. Intel Corp. (NASDAQ:INTC) and Comcast Corp (NASDAQ:CMCSA) own a combined 12.4 percent stake in the company, and have not voiced opposition to the deal. As it stands, Clearwire is slated to lose about $1 billion this year.
CHEAT SHEET Analysis: All the Indicators Say “Consolidate”
It wouldn’t be a proper economic crisis if companies didn’t have to fight just to stay afloat. In fact, it wouldn’t be proper capitalism if companies didn’t have to fight to stay afloat, and in that spirit, the bid for Clearwire looks like exactly the right move for the number three wireless carrier.
Sprint has struggled to build out its Long Term Evolution network while bearing the competitive burden of AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ). Sprint’s shares have rocketed over the last year — over 141 percent gains — but its subscriber base and network remains comparatively small. To boot, T-Mobile USA and MetroPCS Communications (NYSE:PCS) have joined forces and lit a fire beneath Sprint. If Sprint doesn’t keep growing, it will lose its position in the market.
A core component of our CHEAT SHEET investing framework explains that companies riding macro trends tend to outperform those that don’t. In this case, there is a fairly pronounced trend of small carriers getting bossed around or bumped out by larger carriers. The wireless industry is becoming one where only the large will survive, and Sprint intends to be one of those survivors.
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