LOS ANGELES (AP) -- Shares of cellphone infrastructure company Clearwire Corp. fell on Tuesday after an analyst downgraded the stock, saying Verizon Wireless' plan to sell spectrum could delay Clearwire's spectrum sale, possibly past the point by which it needs to raise cash.
THE SPARK: Jefferies analyst Thomas Seltz downgraded Clearwire to "Hold" from "Buy" and cut his price target on shares in half, to $2.
THE BIG PICTURE: Clearwire runs a wireless data network used mainly by Sprint customers. Sprint Nextel Corp. is Clearwire's largest investor, but Clearwire operates independently.
THE ANALYSIS: Seltz said Verizon Wireless's announcement last week that it plans to sell 700 mega-Hertz of spectrum "throws a wrench in the works" of Clearwire's planned sale.
Clearwire needs to raise about $2.5 billion to continue building out its next-generation "4G" network and selling its unused spectrum is key, he said. The company would face a "challenge" by the second quarter of next year if it isn't able to raise the money by then, he said.
Still, Verizon's sale of spectrum could be delayed by regulators. The uncertainty may put a damper on Clearwire shares, Seltz said.
A Clearwire spokesman declined to comment, citing a quiet period ahead of the company's quarterly earnings announcement Thursday.
SHARE ACTION: Clearwire shares fell 15 cents, or 9.7 percent, to close Tuesday at $1.40. They have fallen steadily from their 52-week high of $5.47 last April.