Virgin Mobile USA
( VM) 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
. 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.
"The closing of the Helio acquisition and the expected repayment of $50 million of our senior credit facility are expected to further improve our liquidity and cash flows," said CFO John Feehan in a statement.
Looking ahead, Virgin Mobile said that earnings per share in the third quarter should fall in a range of breakeven to 3 cents a share. Analysts, on average, are expecting a profit of 8 cents a share, according to Thomson Reuters.
Also in the third quarter, net service revenues should "stabilize and be consistent with the second quarter," which amounted to $291.36 million. Virgin Mobile also said it expects net customer adds to be in a range of a loss of 20,000 to a gain of 20,000.