Virgin Mobile USA

( VM) swung to a third-quarter profit Monday, handily beating analysts' expectations for the quarter.

Although the stock finished Wednesday's session 12.7% lower, shares surged 25% in late trading to $1.20.

The Warren, N.J., based wireless communications company said it had net income of $4.07 million, or 7 cents a share, in the quarter ended Sept. 30, compared with a loss of $7.38 million, or 29 cents a share, a year ago.

Excluding one-time items related to the company's acquisition of Helio in August, Virgin Mobile earned 8 cents a share. On average, analysts expected a profit of 4 cents a share, according to Thomson Reuters.

Virgin Mobile acquired the Helio brand from

SK Telecom

(SKM) - Get Report

and

Earthlink

(ELNK)

. "The successful completion of the Helio acquisition has enhanced our capital structure, and positioned the Company well for continued growth and profitability in the fourth quarter and into 2009," said CFO John Feehan in a statement.

The company's total operating revenue inched 1.2% higher from a year earlier to $323.2 million. Wall Street expected revenue of $314.6 million.

Virgin Mobile saw gross subscriber additions total 821,491, rising from 759,927 in the same quarter a year ago. For the quarter, the company had a net loss of 3,267 subscribers, compared with a net gain of 45,830 in the third quarter of 2007. The company said it ended the quarter with 5.16 million customers, up from 4.87 million a year earlier.

Meanwhile, the churn rate, which measures customer defection, rose to 5.5% from 4.9% a year ago but was down sequentially from 5.6%. The average revenue per subscriber fell to $20.19 from $20.59 a year earlier.

On the positive side, cost per gross customer addition shrank to $105.86, compared with $127.35 a year ago.

Looking ahead, Virgin Mobile said that fourth-quarter net customer additions are expected to be in the range of 60,000 to 100,000 with gross additions roughly flat with the fourth quarter of 2007. Including the incremental costs associated with the Helio acquisition and the transition to

IBM

(IBM) - Get Report

for managed information technology service, adjusted earnings per share for the full year 2008 are expected to be in the range of 3 cents to 7 cents a share.

The Thomson Reuters average estimate for full-year 2008 is for a profit of 16 cents a share, although that figure typically excludes one-time items.