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  1. #1
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    Leap Wireless sees subscribers decline in quarter

    Leap Wireless posts decline in customers, as more leave than join up in the quarter


    Leap Wireless

    reported weaker results for its seasonally slow second quarter as it continues to transition its business toward
    smart phones

    and all-
    inclusive rate


    San Diego

    wireless carrier said Wednesday it lost $65.2 million for the quarter, or 85 cents a share, on

    of $760.5 million.

    Wall Street

    analysts expected a loss of 50 cents a share on revenue of $779 million.

    The company had adjusted operating income of $160.7 million, down 6.6 percent from the same quarter last year.

    Leap, which sells month-to-month Cricket brand wireless service, had 5.7 million customers at quarter end, up 8.7 percent increase from a year ago.

    It had a net gain of 29,000 voice customers in the quarter, but lost 132,000 broadband customers, resulting in a net decline of 103,000 customers compared with the first quarter.

    Customer turnover was 4.2 percent, a decrease from 5 percent for the same quarter last year. Nearly 50 percent of new handset sales in the second quarter were smart phones.

    Leap is betting that there's demand for smart phones in the price sensitive month-to-month wireless market. The company thinks smart phone users will stick around longer and will buy more expensive voice and data plans.

    But it's an unproven theory. The cost to acquire these customers also is higher than non-smart phone customers because of expenses such as increased phone subsidies. Leap's average bill to sign up each new customers in the quarter was $251, compared with $215 a year earlier.

    While Leap's results were worse than Wall Street analysts predicted, the news was not unexpected. Rival month-to-month carrier

    missed earnings estimates on Tuesday, sending its shares down 35 percent and Leap's shares tumbling 21 percent.

    William Power, an analyst with R.W. Baird, said in a research note that MetroPCS, which is also pushing smart phones, said Tuesday that its turnover of smart phone customers in the quarter was equal to that of non-smart phone customers.
    That was a surprise, Power said, since smart phone customers were expected to reduce turnover.

    "The belief that increasing smart phone penetration should drive higher average revenue per user and lower churn has at least been temporarily torpedoed by the MetroPCS commentary," Power wrote.
    Leap's shares ended Wednesday at $10.04 but fell 59 cents to $9.45 in early after hours trading on the


    Last edited by Chris Rodriguez; 08-04-2011 at 01:06 AM.
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  3. #2
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    Chris Rodriguez's Avatar
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    It's no surprise they lost broadband customers in my opinion. People don't really understand cellular broadband and it's capabilities/limits.
    Please check the forum and post there before PMing me. I have over 674 unread PMs due to the fact that they are issues which should have been addressed here.

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