Stock Preacher

LEAP Wireless International Inc. (NASDAQ: LEAP)

Leap Wireless International Inc. (LEAP) is a wireless communications carrier that offers digital wireless service in the United States under the Cricket brand. Cricket service is offered by Cricket, a wholly owned subsidiary of Leap, and is also offered in Oregon by LCW Wireless Operations LLC (LCW Operations), and in the upper Midwest by Denali Spectrum Operations LLC (Denali Operations). Cricket owns an indirect 73.3% non-controlling interest in LCW Operations through a 73.3% non-controlling interest in LCW Wireless LLC (LCW Wireless), and owns an indirect 82.5% non-controlling interest in Denali Operations through an 82.5% non-controlling interest in Denali Spectrum LLC (Denali). At December 31, 2008, Cricket service was offered in 30 states and had approximately 3.8 million customers. In April 2008, the Company completed the purchase of Hargray Communications Group’s wireless subsidiary, Hargray Wireless LLC (Hargray Wireless).

Leap Wireless International Inc. was founded in 1998 and is headquartered in San Diego, California.

Share Statistics (16-Dec-09)			FY 2007	FY 2008	% Chg	Q3 2008	Q3 2009	% Chg
Symbol	LEAP	Revenue, $Mn	1.63B	1.96B	16.8%	496.7M	599.5M	17.1%
Current price	$16.89	Gross marg.	51.5%	51.3%	0.4%	n/a	51.6%	n/a
52wk Range:	$11.98-42.47	Oper. margin	3.7%	2.4%	35.1%	n/a	0.2%	n/a
Avg Vol (3m):	4,235,350	Net margin	-4.7%	-7.6%	61.7%	n/a	-10.8%	n/a
Market Cap.	1.3B
Dil. Shares Outst.	77.4M	EPS, $	-1.13	-2.17	92.0%	-0.72	-0.85	18.1%

Source: Reuters.com, SEC Filings.

Financial Summary

In early November, LEAP reported financial and operational results for the quarter ended September 30, 2009. Service revenues for the third quarter increased 25% over the prior year quarter to $541.3 million. The Company reported adjusted operating income before depreciation and amortization (OIBDA) of $121.5 million for the third quarter, up $24 million over the comparable period of the prior year. For the quarter, adjusted OIBDA for the Company’s existing business was $175.0 million, an increase of $28.1 million from the prior year period. This improvement reflects an approximately 263,000 year-over-year increase in end-of-period customers in existing markets and the resulting benefits of scale. The Company’s operating income for the quarter was $1.4 million, compared to $2.4 million for the third quarter of 2008. The Company reported approximately 116,000 net customer additions. Third-quarter net customer additions included approximately 102,000 net voice additions in the Company’s expansion markets (those markets that launched service after December 31, 2007); a net loss of approximately 83,000 voice customers in the Company’s existing markets (those markets in operation on December 31, 2007); and approximately 97,000 net broadband additions. Churn for the quarter was 5.4%.

Financial Strength (16-Dec-2009)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	1.53	0.70	0.62	0.92
Current Ratio (MRQ)	1.71	0.76	0.64	1.09
Long-Term Debt to Equity (MRQ)	158.18	62.78	44.15	124.64
Total Debt to Equity (MRQ)	128.58	69.47	62.73	185.50

Source: Reuters.com, SEC Filings.

Analyst Consensus

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast among 22 polled investment analysts. Against the Leap Wireless International Inc. company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	5	4	13	0	0	0
4 weeks ago	4	4	13	0	0	0
2 months ago	3	4	13	0	0	0
3 months ago	3	6	11	0	0	0
Last year	4	5	8	0	0	0

The 15 analysts offering 12-month price targets for LEAP have a median target of 18.00, with a high estimate of 30.00 and a low estimate of 12.00. The median estimate represents a 6.82% increase from the last price of 16.85.

Source: www.ft.com

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Dec-09	13	634.73	655.00	620.60	683.72
Quarter Ending Mar-10	6	657.96	692.40	639.00	624.61
Year Ending Dec-09	14	2,418.27	2,439.00	2,404.50	2,552.16
Year Ending Dec-10	15	2,751.22	2,969.90	2,629.30	3,221.36
EARNINGS (per share)
Quarter Ending Dec-09	18	-0.71	-0.35	-0.98	-0.32
Quarter Ending Mar-10	7	-0.50	-0.33	-0.59	0.25
Year Ending Dec-09	13	-3.01	-2.64	-3.47	-1.47
Year Ending Dec-10	18	-1.02	-0.03	-2.64	1.02
LT Growth Rate (%)	2	18.00	28.00	8.00	20.00

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=LEAP.O

Investment Highlights

LEAP operates in 34 states and the District of Columbia with more than 4.5 million wireless customers nationwide. The Company is the seventh largest wireless carrier in the United States and a Fortune 1000 company.

In late November LEAP the upcoming availability of its Cricket MSGM8 (Message Mate). The MSGM8 is a compact bar QWERTY phone optimized for one-touch connecting for access to messaging and e-mail, scheduler and MyHomeScreen for favorite social networking sites, sports, weather, news and more on Cricket’s 3G network. The Cricket MSGM8 features a full QWERTY keypad, large 2.2” color display, a 1.3MP camera, Bluetooth^® and speech recognition for hands free calling.

Two years ago MetroPCS tried to buy LEAP, but shed the idea when the two companies couldn’t agree on terms.  Recent plunges in shares of LEAP and MetroPCS are once again stirring speculation from Wall Street analysts that the two companies could be in merger talks, though neither company has issued an official comment.

According to analysts, a merger transaction would improve holdings and lower operating costs for the companies.

Last month LEAP said it anticipated adding fewer customers than expected for 2009, now expecting 1.1 million – 1.3 million subscribers, down from the previous forecast of 1.5 million. MetroPCS lowered its guidance as well, expecting to add 1 million – 1.2 million, down from initial projections of 1.4 million to 1.7 million.

Source: http://www.leapwireless.com/index.htm

Technical Analysis

Source: http://stockcharts.com

LEAP is trading above its 50-day moving average. While this is normally considered to be a bullish sign, the moving average is downward sloping, which means that investors have been liquidating shares during this time period and tempers the bullishness of the signal.

LEAP is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

The MACD for LEAP currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Dec-16-2009	symbol	Share, $	$ Mn	2009	2010	2009	2010
AT&T Inc.	T	27.77	163.87B	13.78	n/a	n/a	n/a
Sprint Nextel Corp.	S	3.84	11.05B	n/a	n/a	0.34	n/a
Verizon Communications Inc.	VZ	33.09	94.00B	16.97	n/a	n/a	n/a
Communications Median			89.64B	15.37	n/a	n/a	n/a
LEAP Wireless International Inc.	LEAP	16.89	1.32B	n/a	n/a	0.57	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	99,752	2
Sales	3,127,270	4
Net Shares Purchased (Sold)	(3,027,518)	6
Total Insider Shares Held	13.98M	n/a
% Net Shares Purchased (Sold)	(17.8%	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(11,162,300)
% Change in Institutional Shares Held	(16.5%)

Source: Yahoo Finance

Report Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

Popularity: 1% [?]