Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Ruffian who wrote (43073)	10/1/1999 8:06:00 PM
From: LBstocks	Read Replies (1) \| Respond to of 152472

INTERVIEW-Leap Wireless' Russia exit not a problem By Barbara Etzel NEW YORK, Oct 1 (Reuters) - Start-up wireless phone carrier Leap Wireless International's exit from Russia won't hurt the company's overall strategy and ability to fund other projects, Harvey White, chief executive at Leap, said on Friday. White said Leap had already decided to focus on introducing flat-fee mobile phone service in Western Hemisphere markets like the United States, Chile and Mexico before the Russian problems took center stage two days ago. On Wednesday, Leap said it expects to write off $27.3 million for its stakes in Russian businesses. That write-off will be taken in its fiscal year ended Aug. 31, White told Reuters in an interview. "I don't think it (Russia write-off) will affect our ability to finance other projects," said White, adding that as a start-up, initial losses are to be expected, and incurring them now rather than later is preferable. Leap, which was spun off from Qualcomm Inc. a year ago, is expected to lose $7.63 a share in fiscal 1999, according to the analysts' consensus estimate from the market research firm First Call/Thomson Financial. First Call is expecting a much bigger loss of $17.92 a share in fiscal 2000. White stressed that early losses are increasingly accepted in the telecommunications industry after many companies have proven that heavy investments that cause the losses early on ultimately translate into shareholder value. "It's not uncommon to see these businesses have very high values to the shareholder because of the exit value to the business and because of the cash stream that the businesses will generate. But in the short-term there is little or no money," White said. While Leap was not launched with the intention of selling it, any offers that might emerge would be evaluated with shareholder value in mind, White said. For now, Leap is focused on establishing service in about 30 mid-size U.S. cities. Initial service began in March in Chattanooga, Tenn., and the company plans to offer services in Nashville, Tenn. by the end of the year. Leap's U.S. service, Cricket, costs a flat $29.95 a month for mobile phone service that works in local calling areas with simplified billing procedures. "Seventy-five percent of people who have bought from us never had a wireless phone," said White. Yet with only 42,400 subscribers worldwide as of June 22, Leap is tiny in comparison to some of the industry giants. The wireless joint venture between Bell Atlantic Corp. and Vodaphone Air Touch , for example, would easily create the biggest U.S. mobile phone network with 20 million customers. AT&T has about 11 million customers and Sprint PCS Group has about 4 million customers. "We are not really competing with the Sprints and AT&Ts," White said. "We are expanding the market to a whole set of customers not being chased today." Rather than the wireless giants, Leap instead sees local phone service providers as its biggest competitors. White reckons that within a year or two, many people's first phone will be cellular, with traditional land lines getting passed over by cheaper phones like Leap's Cricket. White added that young people entering the workforce are likely to be on the cutting edge of the trend. White said that any competitors will need to achieve Leap's low cost structure, which his company created with cost-conscious customers in mind. Larger players can do that, but he stressed that the larger the company, the higher the costs are and the longer it takes for decisions to be made. Meanwhile, Leap is rolling out its service in Chile and Mexico. Leap will relaunch service in Chilesat PCS in about a month, White said. In April, the company bought out partner Telex-Chile's 50 percent share for $50 million and now owns 100 percent of the service. At the time, a spokesman for Leap said the company was looking for a Chilean partner or investor. However, since a strong, local management team is in place, White said he is a "little more relaxed" about looking for a local partner. The company also will introduce service in Mexico City by year-end, expanding upon its current operations through its 29 percent stake in fixed and mobile phone operator Pegaso.