Leap Wireless (LEAP) has turned away a takover offer from competitor MetroPCS (PCS).
According to Reuters "Leap said the bid was too low because it did not reflect the company’s strong growth prospects and said Leap was better positioned than MetroPCS within the industry."
The $69 per share bid did seem low. In June, LEAP traded at $99. The companies stock was then hammered back to Earth by its latest earnings. Leap’s revenue rose 47 percent to $393.2 million in the quarter, up from $267.9 million during the same quarter a year ago. Net income fell to $3.2 million, or 5 cents per share, from $7.5 million, or 12 cents per share, during the same quarter in 2006.
LEAP shareholder now have to decide whether the last quarter was a "one time" miss or whether management is unable to get costs and subcriber churn under control.
Douglas A. McIntyre
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