Virgin Mobile USA's Net Declines

Virgin Mobile USA (VM Quote) said second-quarter earnings were halved from a year ago, although results still came in better than analysts expected.

The stock surged nearly 10% in late trading to $3, after it finished Wednesday's trading session unchanged.

The Warren, N.J., based wireless communications company said it had net income of $3.54 million, or 7 cents a share, in the quarter ended June 30, compared to a profit of $7.14 million, or 14 cents a share, in the year-ago quarter. On average, analysts expected a profit of 2 cents a share, according to Thomson Reuters.

Total operating revenue slipped 3% from a year earlier to $317.4 million. Wall Street was looking for revenue of $314.3 million.

Among key metrics closely watched by analysts, Virgin Mobile had gross subscriber additions of 728,370 compared to 785,326 in the same quarter a year ago. The churn rate - which measures customer defection - fell to 5.6% from 5.7% a year ago. The company said it ended the quarter with 4.99 million customers, up from 4.83 million a year earlier.

On the negative side, the average revenue per subscriber fell to $19.32 from $20.97 a year earlier. The cost per gross customer addition swelled to $113.38, compared to $100.03 a year ago. Additionally, net customer losses ballooned to 111,273, more than doubling that in the year-ago quarter.

During the second quarter, Virgin Mobile announced it would acquire the Helio brand from SK Telecom (SKM Quote) and Earthlink (ELNK Quote). Concurrent with the pending acquisition, Virgin Group and SK Telecom will each invest $25 million of equity capital in the company, Virgin Mobile said Wednesday. The $50 million will be used to pay down a portion of the company's third-party debt.