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MetroPCS second quarter earnings plunge 48%

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MetroPCS second quarter earnings plunge 48%
It was a rough second quarter for pre-paid cellular carrier, MetroPCS. It might have been the sharp 48% plunge in year over year earnings that led the networker to chop $5 off the price of its unlimited plans.  For $40 a month, you  receive unlimited voice, texting and web access. Paying an additional $5 a month to $45 will allow you to add unlimited email, social networking and web access. Smartphone users can sign up for the $50 a month plan which includes all of the previuosly mentioned features plus unlimited HTML browsing. The carrier is in a competition for pre-paid customers with TracFone and Boost Mobile. The former offers a prepaid service with voice, texting and 30MB of data for $45 a month. The latter has a $50 unlimited plan that was started in the beginning of this year.

As for the just completed second quarter, MetroPCS added a net 206,000 new customers to its roll, bringing the total to 6.3 million. However, that was lower than analyst expectations for 400,000 new customers and was less than 33% of what the Dallas based carrier had added in the first quarter. Analyst Walter Piecyk of Pali Research called the results "Ugly" and blamed the previously mentioned competition with Boost Mobile for the poor results. Boost added a net 938,000 new subscribers in their last three month period. The churn rate was a very poor 5.8%, compared to 4.5% in last year's second period and 5% from the first period of this year. Of course, churn rates at pre-paid firms look bad when compared to firms like Verizon who lock in the majority of their accounts via contracts signed in exchange for subsidized pricing on new phones.

For the second quarter, MetroPCS earned $26 million dollars or 7 cents a share, down 50% from last year's $50 million dollars in profit, which worked out to 50 cents a share. Metro customers lowered their average monthly spending by $1.53 to $40.52 year over year. MetroPCS shares took it on the chin, dropping 29% to $8.99 a share at the closing bell.

source: MarketWatch, CNET

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