March 12 (Bloomberg) -- Virgin Mobile USA Inc., Richard Branson's pay-as-you-go mobile-phone service, posted a fourth- quarter loss and projected earnings for this year that missed analysts' estimates, sending the shares down 21 percent.

The net loss was $14.7 million, or 30 cents a share, Warren, New Jersey-based Virgin Mobile said today in a statement. Revenue rose 9.5 percent to $326.5 million.

Virgin Mobile netted 209,669 subscribers in the quarter, missing a November prediction for as much as 400,000. Customers defected to pay-as-you-go and contract plans offered by AT&T and Verizon Wireless, the two largest mobile-phone companies in the U.S. Virgin Mobile may add as few as 5,000 customers in the first quarter, missing a 130,000 estimate by Michael Nelson, an analyst with Stanford Group Co. in New York.

``This is materially worse than even the most bearish outlook,'' Nelson said in a telephone interview. ``Virgin Mobile is being marginalized.''

Virgin Mobile fell 90 cents to $3.30 in extended trading, after closing at $4.20 on the New York Stock Exchange. The stock has dropped 72 percent since the company's initial public offering on Oct. 10.

For the first quarter, service revenue will be $293 million to $303 million, missing the $349.7 million projected by Nelson.

Customer Spending

Virgin Mobile said customers may cut spending this year because of ``challenging economic times.'' The company said annual service revenue in 2008 will be little changed from last year.

The company, a joint venture of Virgin Group Ltd. and Sprint Nextel Corp., cut its 2008 forecast for earnings before interest, taxes, depreciation and amortization to as much as $130 million, down from a previous projection of $155 million to $175 million. Analysts in a Bloomberg survey estimated $142.5 million.

``Our forecast assumes that we will face a difficult economic environment in 2008,'' Chief Executive Officer Dan Schulman said on a conference call.

A drop in average revenue per user and an increase in customer acquisition costs probably led to the reduction, Nelson said. Virgin Mobile said in February that it decided not to cut handset prices as much as competitors.

The fourth-quarter net loss shrank from $44.9 million, or $1.74, a year earlier. While revenue rose, operating expenses were little changed from the same quarter in 2006.

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net

Last Updated: March 12, 2008 18:29 EDT