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Technology Stocks : Leap Wireless International (LWIN)
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To: Pierre who wrote (1828)3/29/2002 1:48:38 PM
From: slacker711  Read Replies (3) of 2737
 
I think if the business model is on track, and maybe ahead of schedule after the next couple of quarters, LEAP will be acquired by a major player with deep pockets. I think this scenario was a major component in pcstels interest in LEAP.

Unfortunately, I think I might have to agree....

The problem is that the wireless space moves too quickly to have your expansion plans on hold for 18-24 months. The covenant basically restricts Leap from launching any new markets until the 4th quarter of '03. There could be any number of new developments between now and then that would hurt Leap's ability to duplicate their current success.

How well would Leap do if they are the second flat-rate player into a market? They wouldnt get all of the free press that they currently get at the launch. Also, there are a finite number of people that are attracted to plans like Leap's (25-30%?). The overall penetration rate will probably be above 60% so the markets that Leap has been successful with should already have been targeted.

I think HDR is a wild card in all of this....also, the ability of Leap to get new bank financing could change some of the variables. However, I think it is increasingly likely that Leap will eventually be taken over.

Slacker
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