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Updated from 3:49 p.m. EST

Shares of

Sprint Nextel


ticked higher late Thursday on a report the company had cancelled a convertible preferred stock offering.

Hours later, the company confirmed the cancellation in a press release, saying the offering wasn't "economically attractive due to unfavorable market conditions. "

The Overland Park, Kan., phone company had said Wednesday it would sell $3 billion in cumulative perpetual preferred stock and planned to use the net proceeds of the offering for general corporate purposes including, among other things, debt reduction.

"The company remains committed to paying down debt and strengthening its balance sheet," Sprint said.



commentator said earlier Thursday that investors were shorting the stock leading up to the close of trading, and that word of the shelved offering forced shorts to cover.

After trading as low as $7 earlier in the session, shares of Sprint jumped as much as 16% before pulling back. The stock closed Thursday up 45 cents to $7.79.

On Wednesday, the embattled phone shop beat Wall Street's bottom-line estimates for the second quarter Wednesday, although it missed revenue targets due to continuing struggles at its wireless business. Sprint's declining wireless division saw revenue drop 11% from the same period a year ago to $7 billion, as the unit continued to see subscriber losses.

Among Sprint's rivals,



was losing 2% to $30.25 and



was down 1.7% $33.67.