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 : Leap Wireless International (LWIN) -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (1264)	2/6/2002 12:32:23 PM
From: pcstel	Read Replies (2) \| Respond to of 2737

slacker: Yes, first month of service is still included. And I don't expect that to go away. The problem lies in the administration of collecting the first months service fee. I mean you buy the phone! Now how do you pay for your first months service? Send in a check takes a while? Maybe selling an additional service card at the POS? I don't think it is really all that important given our cost of service structure. So they pay $79 for a phone/first month's airtime package. LWIN pays on average about 109 for the phone and any margins to the resellers IMO!. So LWIN deducts the first month of service from the sale of the phone and records that $31 or so as Service Revenue, and books the remaining as Equipment Revenues. So thats $49 toward equipment , $31 toward Service Revenue. Cost of service is on average $16. So thats $15 in margin on the first month of service. So subsidy out the door for a phone and first month of service in real cash terms (non inclusive of marketing/sales expenses) is about $40. So the subisidy is at break even during their third month of servcie. So I think that lower prices on phones from the manufacture would be a better solution. Expecially when we see sub $100 1X phones. Using the Voice Only 1X Asic! Have they started shipping that yet? PCSTEL