CS First Boston Cuts Leap Wireless to 'Hold'
Credit Suisse First Boston downgraded Leap Wireless (LWIN ) to hold from buy.
On Monday the company posted a $2.17 fourth-quarter loss (including a gain) vs. a $3.82 loss. Analyst Cynthia Motz says its handset subsidy costs continue to rise higher than her forecast -- making it appear that Leap's strong net subscriber addition numbers may be resulting from aggressive handset promotions.
Motz continues to believe the company's subscriber base churn will be a volatile metric. She notes the pressure on the wireless sector over the past couple of months, and she doesn't believe Leap Wireless will acheive 2002 guidance of a $75 million EBITDA loss; instead, Motz sees a $235.2 million EBITDA loss. Finally, she says the company's debt and equity are volitile. Motz widened her $15.47 loss 2002 estimate to a $20.20 loss.
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