Virgin Mobile misses estimates

For the most part, we’ve gotten most of the wireless companies’ earnings for 2007 already reported. However, there was one slagging behind this year: Virgin Mobile. The company went public in October, and were soon after hit with a lawsuit related to it. Things aren’t looking much better with this report. They’ve basically come in below expectations in everything, and haven’t made very optimistic projections for 2008.

While analysts felt that Virgin could have added up to 400,000 subscribers in the fourth quarter, they ended up with just 209,669 net. This is reportedly because many of their customers bolted for pay-as-you-go plans offered by the major carriers: Verizon and AT&T.

What’s worse is the projection for this current quarter. Michael Nelson, analyst with Stanford Group Co., estimates 130,000, but it’s said that Virgin might add as few as 5,000. Then they’d have some serious questions to answer from investors who have seen their stock tumble from a $15 opening to a current rate of $3.30.

“This is materially worse than even the most bearish outlook,” Nelson said in a telephone interview. “Virgin Mobile is being marginalized.”

Virgin is looking to blame the economic times for their difficulties. While there is a level of merit in that, I don’t think that missing your estimated customer gains by 125,000 on the short end can all be heaped on the economy. In fact, prepaid companies stand to gain customers in times of economic downturn. While the average revenue per user might go down, the sheer number of subscribers should rise. That is, unless they’re all using Verizon’s and AT&T’s prepaid plans.

[Bloomberg]

Related Posts

2 Responses

1. ashi Says
   

   its a sad news….lets see whether Virgin is able to make a place in the market.,

   
   Posted on March 14th, 2008 at 4:59 am
2. Virgin launches LG Flare | Prepaid Reviews Says
   

   [...] subscribe to the the feed.There has been much focus over the past few days on Virgin Mobile. They didn’t fare too well in the latter part of 2007, causing their stock to decline. And there was also the matter of an ad [...]

   
   Posted on March 17th, 2008 at 7:11 am

Leave a Reply