Nov. 9 (Bloomberg) -- Leap Wireless International Inc., the operator of Cricket and Jump mobile-phone service, dropped the most in three years after predicting subscriber gains that missed analysts' estimates and deciding to restate results.

Leap added 36,500 subscribers in the third quarter, missing its own forecast of at least 40,000, according to a statement from the San Diego-based company. Leap expects to gain 70,000 to 130,000 this quarter, missing the 220,000 estimate of Stanford Group Co. analyst Michael Nelson.

``One has to be concerned whether this is something that's specific to Leap and whether they're mis-executing in their market,'' said New York-based Nelson, who doesn't own the shares. ``The fourth-quarter guidance I thought was extremely disappointing.''

The miss may persuade Leap to reconsider its rejection of a takeover bid from larger rival MetroPCS Communications Inc., the analyst said. Leap has posted four straight quarters of profit declines because of spending to build out its network, and has struggled to add customers amid competition from MetroPCS.

Leap shares fell $21.38, or 37 percent, to $36.72 at 4 p.m. New York time in Nasdaq Stock Market trading. The drop was the biggest since at least August 2004. MetroPCS slid $4.70, or 22 percent, to $16.10 on the New York Stock Exchange, the most since it first sold shares to the public in April.

MetroPCS Declines

``Their ability to attract new customers has somewhat run in tandem,'' ICAP analyst Ben Abramovitz said in an interview. ``If Leap is giving a little bit softer guidance than people would expect, then Metro, at least in the short term, is going to be painted with the same brush.''

Both companies serve younger customers who don't have the credit scores to qualify for service from AT&T Inc., Verizon Wireless and other larger carriers. Those clients are canceling service as economic growth slows, Abramovitz said.

MetroPCS, based in Dallas, withdrew its bid for Leap last week, saying it failed to engage the company in ``meaningful negotiations.'' New York-based Abramovitz who advises investors to buy MetroPCS and doesn't own the stock.

Leap's restatements, which go back to 2004, may cut service revenue and operating income by $20 million each. The company said the errors aren't a result of staff misconduct. Leap counted extra months of sales from clients who ended their service and booked some sales and costs over the wrong periods.

Leap may have violated the terms of its loan and debt agreements with the errors, and said it might have to pay as much as $890 million back to lenders and $1.1 billion to bondholders immediately if they don't waive the terms.

The company plans seek waivers from its lenders and bondholders. Leap had $101.3 million in cash from operating activities at the end of the second quarter.

Third-quarter service revenue was $348 million to $352 million, the company said.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: November 9, 2007 16:09 EST