LEAP Wireless Earnings Cheat Sheet: Missed Profit Estimates

Leap Wireless International, Inc. (NASDAQ:LEAP) reported its results for the first quarter. Leap Wireless International, Inc. is a wireless communications carrier that offers digital wireless services in the United States of America under the Cricket brand.

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Leap Wireless International Earnings Cheat Sheet for the First Quarter

Results: Loss widened to $96.2 million ($1.26/diluted share) from $68 million or 90 cents per share.

Revenue: Rose to $779.9 million YoY.

Actual vs. Wall St. Expectations: LEAP fell short of the mean estimate of a loss of $1.06/share. Estimates ranged from a loss of 45 cents per share to a loss of $1.58 per share.

Quoting Management: “During the first quarter, we saw significant, continued progress across key customer performance metrics, including gross additions, churn and ARPU,” said Doug Hutcheson, Leap’s president and chief executive officer. “First quarter gross additions were solid, even as we absorbed expected reductions in customer additions due to creating a simpler path for existing customers to upgrade. Customer upgrades for our compelling new devices have continued to be significant, and we recently reached a significant milestone by adding our one-millionth smartphone customer. Increased upgrades to our new data devices during the quarter and continued adoption of our new service plans drove voice churn down to 2.8 percent, the lowest level we have seen in nearly a decade. The impacts of the new service plans and better devices also continued to drive improvements in ARPU, which increased by $1.21 over the fourth quarter of 2010, one of our largest quarterly sequential increases ever. Although customer device upgrades have impacted adjusted OIBDA margins in the short-term, they are driving strong improvements in customer lifetime value and customer unit contribution margin, which exceeded 25 percent of ARPU in the first quarter. We believe that our significant progress with these key customer metrics provides us with a solid foundation to deliver expanded adjusted OIBDA margins in the coming quarters.”

Competitors to Watch: MetroPCS Communications, Inc. (NYSE:PCS), United States Cellular Corp. (NYSE:USM), Sprint Nextel Corporation (NYSE:S), Telephone & Data Systems, Inc. (NYSE:TDS), Verizon Communications Inc. (NYSE:VZ), Clearwire Corporation (NASDAQ:CLWR), NTELOS Holdings Corp. (NASDAQ:NTLS), AT&T Inc. (NYSE:T), Shenandoah Telecommunications Co. (NASDAQ:SHEN), and USA Mobility, Inc. (NASDAQ:USMO)

Stock Performance: Shares of LEAP are trading at $15.07 as of May 4, 2011 at 6:03 PM ET, down 0.8% from the previous closing price of $15.19.

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