MetroPCS Communications Inc. Earnings: Net Income Wasn’t What Wall Street Wanted

S&P 500 (NYSE:SPY) component MetroPCS Communications Inc. (NYSE:PCS) reported a lower net income in first quarter, missing analysts’ estimates. MetroPCS Communications is a wireless communications carrier that offers broadband mobile services in the United States.

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MetroPCS Communications Earnings Cheat Sheet for the First Quarter

Results: Net income for MetroPCS Communications Inc. fell to $21 million (6 cents per share) vs. $56.4 million (15 cents per share) a year earlier. This is a decline of 62.7% from the year-earlier quarter.

Revenue: Rose 6.9% to $1.28 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: MetroPCS Communications Inc. fell short of the mean analyst estimate of 17 cents per share. Analysts were expecting revenue of $1.29 billion.

Quoting Management: Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS, said, “Our first quarter results highlight our continued focus on getting affordable 4G LTE smartphones into the hands of our customers. We upgraded 16% of our subscriber base, 40% of which went from a feature phone to a smartphone, and we reported churn of 3.1%, matching the all-time low for the Company. However, the significant number of upgrades at a higher promotional handset cost during the quarter, resulted in higher costs and as a result both Adjusted EBITDA and Adjusted EBITDA margins were pressured significantly.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 16.2% to $1.24 billion in the fourth quarter of the last fiscal year. The figure rose 18.1% in the third quarter of the last fiscal year from the year earlier and climbed 19.4% in the second quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 25 cents versus a mean estimate of net income of 16 cents per share.

Net income has increased more than twofold year-over-year on average across the last five quarters. The biggest gain came in the fourth of the last fiscal year, when income climbed more than sixfold from the year-earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 26 cents a share to 25 cents over the last thirty days. For the fiscal year, the average estimate has moved down from 93 cents a share to 87 cents over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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