NEW YORK (AP) — Shares of Leap Wireless International Inc., the country’s seventh-largest wireless carrier, plunged Thursday after it reported a loss of subscribers in the second quarter.
THE SPARK: Late Wednesday, the parent of the Cricket cellular service posted a wider loss for the April-to-June period and said it lost a net 103,000 subscribers. It gained some phone customers but lost far more wireless broadband customers, as it has stopped marketing this service due to the load the users place on its network. Net loss in the quarter was $65.2 million, or 85 cents per share, compared with a loss of $18.2 million, or 24 cents per share, a year ago. Revenue was $761 million, while analysts polled by FactSet had expected $780 million.
THE ANALYSIS: The report comes after MetroPCS Communications Inc., which has a similar low-cost business model, also reported weak results for the quarter. It blamed the economy and said some of its customers had trouble coming up with their monthly fees. But Leap executives don’t seem to see the economy as a challenge. They told analysts on a conference call that things will improve this quarter.
Analyst David Dixon at FBR Capital Markets said he’s expecting third-quarter results to be similar to the second quarter. He lowered his price target to $11 from $12 but kept a “Market Perform” rating. To become more optimistic about the company, he wants to see an improvement in subscriber trends and cost controls.
SHARE ACTION: In midday trading, Leap’s stock fell $3.06, or 31 percent, to $6.97. It was an all-time low for the stock, which has lost half its value in a week.