Leap Drops as Analyst Says AT&T Deal Unlikely: San Diego Mover
The San Diego-based company, which yesterday posted weaker- than-expected fourth-quarter revenue, was reported to have held discussions with AT&T about a possible deal, according to the Wall Street Journal. The newspaper didn’t identify its sources in a report posted online Feb. 15.
“It becomes increasingly difficult to recommend Leap shares for purchase at a time when the risks for the entire U.S. wireless industry has increased and Leap remains in a relatively weak position,” Gregory Miller, a New York-based analyst with Collins Stewart, wrote in research note today. It’s also “highly unlikely AT&T (T) would acquire it as recently speculated,” said Miller, who cut his rating from “buy” to “neutral.”
Leap had gained 10 percent yesterday after the Journal reported the talks with AT&T, the second-largest wireless carrier.
Leap reported a smaller fourth-quarter loss than analysts predicted as smartphone sales increased. The net loss was $84.4 million for the fourth quarter, or $1.10 a share, compared with a net loss of $249 million, or $3.28, a year earlier, the company said in a statement. That was narrower than the $1.13 average of analysts’ estimates in a Bloomberg survey.
Revenue was $767.4 million, up 8.4 percent from a year earlier. Analysts had predicted $806.5 million. Cost per gross addition, or the average price to add each new customer, rose 14 percent to $238 in the period.
Greg Lund, a Leap spokesman, wasn’t available for comment.
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