Leap Wireless Fraud -4: 5% 1Q Customers Involved In Fraud
DOW JONES NEWSWIRES
Susan G. Swenson, Leap Wireless' president and chief operating officer,
said in the release, "We have ceased doing business with a number of
indirect dealers and we have been working with law enforcement as
appropriate throughout this process to prosecute those who steal from our
company."
Leap Wireless previously said about 5%, or 69,000, of its reported
customers at the end of the first quarter may have been involved with
fraud.
As reported in the Form 10-Q, Leap Wireless said it expects to see a
negative impact on the calculated revenue per user, acquisition cost and
churn metrics during the second quarter of 2002, with improvement
expected later in the year as the new programs, systems and processes
continue to mitigate the effects of fraud.
Following fraud concerns, analysts downgraded Leap Wireless' stock amid
fears the carrier could default on vendor loans. "Leap has very little
breathing room," wrote UBS Warburg analyst Colette Flemming in a
research note downgrading the stock from a strong buy to hold.
But in Thursday's release, Leap Wireless said if it continues to execute its
business plan, operations will generate sufficient cash flow, allowing the
company to make required principal and interest payments to lenders.
Updated June 13, 2002 8:34 a.m. EDT
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