Earnings Preview: Leap Wireless (LEAP)

Leap Wireless International, Inc. (NASDAQ:LEAP) is set to report earnings after the close today.  First Call is looking for $0.04 EPS on revenues of $408 million.  Please be advised that estimates are all over the place and some expect a loss.  It is expected to see $0.16 EPS and $429 million revenues next quarter and Fiscal 2007 is expected at $0.22 EPS and $1.67 Billion revenues.  It also looks like expectations have come down since its last quarterly report.

The recent market slide has bitten into its chart quite a bit.  Shares are off almost 25% with this latest slide.  Depending upon your pivot points, that longer-term trend line has either been violated or is at risk.  Fundamental analysts are still positive on the stock and average targets are close to $100.00.  Options traders do not appear to be expecting much, at least not more than a 3% price change in either direction.  Shares also took a drumming after the recent drop at the recent IPO and competitor (and some speculate a merger partner), MetroPCS.

It added a $350 million debt offering in June, so its balance sheet will look a bit different this quarter.  At its analyst meeting June the company gave some key metrics.  It is building out on its latest FCC Spectrum auction wins for its markets this year and next and its analyst slide presentation did hint at acquisitions possible in certain markets.  Leap gave previous guidance saying its expects 125,000 to 175,000 net subscriber adds, with customer churn rates of 4.1% to 4.4%.  Its adjust OIBDA for the quarter was telegraphed at $105 to $115 million.  For fiscal 2007 it last forecast OIBDA of $400 to $470 million.

Jon C. Ogg
August 7, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.