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InPhonic Out of Range

The wireless outfit misses and warns.
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slid 14% late Tuesday after the wireless outfit posted a weak fourth quarter and guided below estimates for 2006.

The Washington-based company lost $25 million, or 70 cents a share, for the quarter ended Dec. 31, compared with a year-ago continuing operations loss of $3 million, or 46 cents a share. Revenue rose to $85 million from $49 million a year earlier.

Analysts surveyed by Thomson First Call were looking for a 22-cent profit on sales of $95 million.

"Our fourth quarter and full year results were disappointing and came in below our expectations," said CEO David A. Steinberg. "With the sale of Liberty Wireless behind us, we will be better able to focus our attention on achieving profitability.

"We are confident that we are undertaking the necessary steps to improve our customer experience and streamline our operations," Steinberg said. "Additionally, in an effort to increase visibility into our earnings, in the first quarter, we are entering into contracts that contain residual-based compensation plans with three of the top six carriers, partly replacing our tier bonus structure. This would have a near-term impact of reducing operating margins. We believe a change in compensation structure toward a residual base will help drive more consistent long-term earnings. We recognize that delivering consistent profitability to our shareholders is paramount to increasing investor confidence."

The company said operating margins for 2006 will be lower than originally expected, due to an anticipated slight reduction in carrier commissions in exchange for residual commissions. InPhonic also guided to first-quarter revenue of around $84 million and 2006 revenue of $405 million or so. Analysts were looking for $94 million for the quarter and $428 million for the year.

Late Tuesday, InPhonic shares fell $1.14 to $6.83.