Sprint shares plunge after company tells investors it needs more cash

Wireless carrier also announces plans for LTE network; partner Clearwire takes huge stock hit

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Shares of Sprint Nextel (NYSE: S) dropped as much as 12 percent Friday after its chief finance officer told investors the cash-strapped wireless carrier may be forced to seek more funds via capital markets or the company's credit line.

The news comes just days after Sprint announced a make-or-break gamble to buy 30.5 million iPhones from Apple over the next four years, with no prospect of seeing profits on the deal until 2014. Sprint indicated on Monday that it would heavily subsidize the iPhones for subscribers who purchase wireless service contracts.

Sprint shares fell as low as 2.65 shortly before noon, after the investor advisory became public. Earlier in the trading day, Sprint's stock climbed as high as 3.39, or 12.6 percent above Thursday's closing price of 3.01. By 1:45 p.m. shares were at 2.67, down 11.3 percent, after a brief comeback fizzled.

The company also announced on Friday that next year it plans to begin rolling out a fourth-generation network based on Long Term Evolution, a mobile broadband standard embraced by rivals Verizon Wireless and AT&T. The move toward LTE calls into question Sprint's relationship with partner Clearwire Corp., which relies on WiMax technology.

From the Wall Street Journal:

A Sprint spokesman said the carrier won't sell devices using Clearwire's WiMax technology after 2012 but will continue to support devices using the technology after that.

The announcement suggests Sprint is distancing itself from Clearwire. Sprint, though, won't be able to go too far yet. The Overland Park, Kan., company owns 54% of Clearwire and is committed to paying the company just over $1 billion to use its network in the future.

Shares of Clearwire (NASDAQ: CLRW), which is based in Kirkland, Wash., plummeted more than 35 percent on Friday to 1.32, matching a 52-week low set in August. Clearwire shares are now down 74 percent this year.

On Tuesday -- the day before the announcement that Steve Jobs had died -- Apple unveiled the iPhone 4S, the first iPhone to be sold by Sprint. The wireless carrier on Friday began taking pre-orders for the Apple device on its website.

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