DOW JONES NEWSWIRES
Leap Wireless International Inc. (LEAP) reported a wider
fourth-quarter loss on losses related to new market launches,
though the prepaid wireless services company nearly tripled its net
customer additions and customer cancellations declined.
Prepaid, or pay-as-you-go, phones used to be the province of
consumers whose weak credit didn't qualify them for traditional
monthly cellphone plans. But lately, a growing number of people
looking to trim household budgets appear to be discovering
them.
"The resiliency of our business and the success of our core
strategic focus continue to enable us to deliver strong customer
and financial results in this challenging economic environment,"
Chief Executive Doug Hutcheson said in a statement Thursday.
Chief Financial Officer Walter Berger said the company expects
capital and net operating expenses will decrease "through the
upcoming year, resulting in the business being at or near free cash
flow breakeven by the end of 2009." Berger added that the company
believes the nearly $600 million in cash, cash equivalents and
short-term investments it had available at year end, in addition to
ongoing cash flow, will provide it sufficient liquidity.
Shares rose 2.3% in late trading to $25.45.
Leap, which targets lower-income customers in smaller markets,
posted a net loss of $54.8 million, or 81 cents a share, compared
with a prior-year net loss of $18.1 million, or 27 cents a share.
The latest results include 86 cents in losses related to the
company's launch of new markets and "other initiatives."
Revenue rose 21% to $518.9 million.
Analysts polled by Thomson Reuters were expecting an 83-cent
loss on $542.9 million in revenue.
Average revenue per user dropped 6.9%.
In January, Leap said its net customer additions for the fourth
quarter nearly tripled to 385,000, putting the year-end total at
3.84 million, up 34% from a year earlier. Its churn rate -
reflecting customer cancellation - improved to 3.8%, down from 4.2%
in the prior year.
The company said Thursday it expects its net customer additions
this year will exceed 1.5 million.
Leap competes in the prepaid wireless market with MetroPCS
Communications Inc. (PCS), which earlier Thursday reported it swung
to a fourth-quarter profit amid expanded availability of its
contract-less, unlimited calling plans.
But the competition is increasing, as T-Mobile's Boost Mobile
recently shook up the industry by offering a flat-rate $50 plan,
which includes unlimited calling, text messages, Web surfing and
walkie-talkie service. Leap Wireless and MetroPCS offer similar
unlimited plans but with regional restrictions.
-By Donna Kardos, Dow Jones Newswires; 201-938-5963;
donna.kardos@dowjones.com