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Leap Wireless International's Cricket is a flat rate cellphone network service that has attracted two million subscribers at a time when more than three-quarters of Americans already have cellphones. Shareholders have benefited with a 58 percent boost in 2006 in the stock price. Continued growth could also be a result for the patient investor, even though the stock looks high currently, trading about 11 times estimated 2007 earnings before interest, taxes, depreciation, and amortization. Manny Weintraub of Integre Advisors has sold off half of his shares but is keeping 280,000 shares. Leap has demonstrated that it can add customers in existing markets as it starts new ones, and the company has also executed on growth to date. Leap in time might be acquired by MetroPCS Communications, a closely held operator with a like business model that may be considering an IPO. MetroPCS runs in fewer, primarily larger markets that do not overlap on Leap territory. Topics covered include the business history of Leap, the target market for Cricket (customers who cannot afford costly plans, dont want contracts and credit checks, and dont travel much), cost limitations achieved by Leap, and possible competition from larger carriers in niche markets as Leap grows.
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Information Sources, Inc.
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