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Leap Wireless Slumps After Second-Quarter Sales Miss Analysts' Estimates
Leap Wireless International Inc., the pay-as-you-go mobile-phone provider, fell as much as 14 percent in Nasdaq trading after its second-quarter sales missed analysts’ estimates because of subscriber losses.
Sales rose to $633.5 million, Leap said yesterday, compared with the $670.6 million average estimate of analysts surveyed by Bloomberg. Leap fell $1.56, or 13 percent, to $10 at 12:25 p.m. New York time in Nasdaq Stock Market trading, and earlier slid to $9.95, the lowest level since its 2004 initial share sale.
Leap, facing competition from MetroPCS Communications Inc. and larger nationwide carriers such as Sprint Nextel Corp., lost 112,000 customers in the second quarter. Robert W. Baird & Co. analyst William Power forecast a gain of about 120,000 users.
Chief Executive Officer Doug Hutcheson said in an interview today that the second quarter would be the slowest this year for sales growth. “We’ll start to see some building strength in the third quarter,” he said today in New York. “We need to improve our operating results.”
Hutcheson said the San Diego-based company had “thinned out” inventory of some devices during the quarter as it rolls out new handsets. He didn’t provide specifics.
Yesterday, Leap introduced pricing plans starting at a flat $35 a month. Hutcheson said the simplicity of the plans will help it draw more customers later this year, particularly in the fourth quarter.
New Name
A plan to change the company’s corporate name to Cricket, Leap’s primary brand, will be inexpensive, Hutcheson said. “It’s pretty easy for us to do,” he said. “I have to reprint five or six business cards.”
Hutcheson declined to comment on whether the company had met with MetroPCS recently to discuss a merger. Dallas-based MetroPCS hired financial advisers to examine a potential acquisition of Leap, two people familiar with the situation said in February. The companies abandoned earlier talks in 2007 after they couldn’t agree on a price.
“We have a good ongoing business,” Hutcheson said. “We don’t need to be part of a consolidation.”
To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net
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