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Leap stock plummets on weak growth

From Bloomberg News

Shares of Leap Wireless International Inc., operator of the Cricket and Jump mobile-phone services, dropped the most in three years Friday after it predicted subscriber gains that missed analysts’ estimates and it decided to restate results.

Leap added 36,500 subscribers in the third quarter, missing its forecast of at least 40,000, according to the San Diego-based company. Leap also said it expected to gain 70,000 to 130,000 subscribers this quarter, missing the 220,000 estimate of Stanford Group Co. analyst Michael Nelson.

“One has to be concerned whether this is something that’s specific to Leap and whether they’re misexecuting in their market,” Nelson said.

The miss might persuade Leap to reconsider its rejection of a takeover bid from larger rival MetroPCS Communications Inc., the analyst said. Leap has posted four straight quarters of profit declines because of spending to build its network, and has struggled to add customers amid competition from MetroPCS.

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Leap shares fell $21.38, or 37%, to $36.72.

Both companies serve customers who don’t have the credit scores to qualify for service from AT&T; Inc., Verizon Wireless and other larger carriers. Those clients are canceling service as economic growth slows.

MetroPCS, based in Dallas, withdrew its bid for Leap last week, saying it failed to engage the company in “meaningful negotiations.”


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