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

To: wonk who wrote (2419)	7/27/2002 10:52:34 AM
From: Dave	Respond to of 2737

Your discount rate of 14% may be low. Since LWIN has publicly traded debt, I would use the yield on that debt as a floor to your discount rate.

To: wonk who wrote (2419)	7/27/2002 2:21:51 PM
From: A.L. Reagan	Respond to of 2737

Churn KILLS Indeed it seems to be doing just that, for a variety of reasons, and with the market segment Leap targets, churn will probably always be higher for them than industry average. So I don't think they are going to be able to operate like a conventional carrier given the market served. They need to adjust the model to this reality. Agree with those who have observed that the shrinkage problem does not appear to be abating. Harvey can make all the EBITDA positive forecasts he wants, but until the metrics start to improve, there isn't a lot of credibility to it. Any idiot can improve sales in almost any business by virtually giving the stuff away. Given the target customer, it looks to me they need to provide entry level users with something akin to the "Hop-On" handset. How about a program like if you stay with the service for six months or a year and pay your bill, you get a free upgrade to a better h.s. when you turn in your el cheapo model? Rather doubt that LWIN would lose that many entry level subscribers by offering a very down market starter handset. Then you move up to gold and platinum level handsets with tenure as a customer and good bill-paying record. Or, as you suggested wonk, by having decent credit and signing a contract, a customer could qualify for the gold or platinum handset level from the get go. But most of Leap's customers probably wouldn't. I'd offer them potential reward for being good customers, so that the higher dollar handsets go to those people. Such a program might decrease both CPGA (by lowering h.s. costs) and churn (by providing an incentive to the good customers to stick around).