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Leap posts profit, gain in revenue

http://www.signonsandiego.com/news/business/20050615-9999-1b15leap.html


By Kathryn Balint
UNION-TRIBUNE STAFF WRITER
June 15, 2005

With customers paying more for cell phone service and extra features, Leap Wireless International yesterday reported its first profit since emerging from bankruptcy last August.

First-quarter net income was $12.6 million, or 21 cents per share, which contrasts with a net loss of $28 million, or 48 cents a share, for the same period in 2004, the company said.

Leap, a San Diego company that provides cell phone service under the brand name Cricket, had revenue of $228 million for the quarter ended March 31, a 10 percent increase from $207 million a year ago.

Doug Hutcheson, Leap's president and chief executive, said the company has strengthened its management team, improved customer satisfaction and introduced a new marketing campaign in the past quarter.

"The company had a strong first quarter and continues to make good progress in building a bright future," he told investors in a conference call.

The company said its subscribers are paying more for cell phone service and additional features. The average revenue per cell phone user increased to $39.03 a month in the first quarter from $37.45 a month a year ago, Leap said. The company also said it is selling more-expensive phones to its subscribers.

Hutcheson said Leap aspires to be the "high-value, low-cost leader in the wireless industry."

Leap, which ended the first quarter with 1.6 million customers, provides cell phone service in 39 markets in 20 states. It added 46,000 net new customers in the first quarter.

The company lowered its expectations for customer additions for 2005, estimating that it will add 125,000 to 200,000 net customers for the year instead of the 150,000 to 200,000 previously estimated. Leap executives said the company's newest features, such as downloads of games, may take longer to attract customers than originally anticipated.

Leap said it expects revenue for the year to be between $890 million and $950 million.

The company has acquired wireless licenses and plans to spend $20 million to $25 million this year to expand into Fresno.

Shares in Leap, a spinoff of San Diego wireless technology giant Qualcomm, soared to $102 a share in March 2000. But two years ago, its stock traded for less than $2 a share.

The company filed for Chapter 11 bankruptcy protection in 2003 and was relieved of $2 billion in debt. Its shares were rendered worthless. Upon emerging from bankruptcy, Leap issued new stock.

Leap announced its earnings after the close of the market. Shares of Leap closed at $27.78, up 13 cents, on the over-the-counter bulletin board.



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Kathryn Balint: [phone]; [e-mail]