FirstNews - February 27, 2009

Fri, 02/27/2009 - 8:20am

Profit Up for T-Mobile USA

By Monica Alleven

T-Mobile USA's net income for the fourth quarter of 2008 was $483 million, up from $442 million in the third quarter of 2008 and $383 million in the fourth quarter of 2007.

Service revenues were up compared to last year, mainly due to contract customer growth and the acquisition of SunCom Wireless.

The company's net adds were in line with what it previously reported - 621,000 in the fourth quarter, down from 670,000 in the third quarter and down from 951,000 in the 2007 fourth quarter. Prepaid made up the majority, accounting for 355,000 net additions.

Still, contract customers comprised 82 percent of T-Mobile USA's total customer base as of Dec. 31, 2008. It ended the year with 32.8 million customers.

In a press release, President and CEO Robert Dotson said the operator in the fourth quarter began to realize in earnest the benefits of its 3G buildout. In the first quarter of offering a widespread 3G service, almost 40 percent of handset sales to contract customers were converged devices, and half of them were 3G-enabled like the G1 with Google and the Samsung Behold.

Churn was 2.4 percent, and blended ARPU was $50 in the fourth quarter. Contract ARPU was $54, and prepaid ARPU was $23.

Growth in messaging continued to be the most significant driver of data ARPU, the carrier said, as customers bought plans that include unlimited voice and data. T-Mobile carried 57 billion messages in the fourth quarter compared with 24 billion in the year-ago quarter.

The average cost of acquiring a customer was $270, down from $300 in the fourth quarter of 2007.

For all of 2008, capital expenditures amounted to $3.6 billion compared with $2.7 billion in 2007. The carrier says its UMTS/HSDPA network now reaches 107 million people in 130 cities.

One of the highlights of the quarter was the introduction of web2go, which is designed to make it easier to view and navigate the Web from basic phones and smartphones alike, the company said. It includes improved search provided by Yahoo! oneSearch.

T-Mobile USA is the U.S. operation of Deutsche Telekom's Mobile Communications Business and is a subsidiary of T-Mobile International. 


Leap's Loss Widens Despite Revenue, Customer Growth

By Maisie Ramsay

Leap Wireless International's fourth-quarter loss widened as the company's spending on new markets and declining ARPU outpaced revenue growth and subscriber base growth.

After market close yesterday, the discount carrier reported a net loss that was more than double last year's figures. Leap lost $54.8 million in the fourth quarter, or 81 cents per share, compared to a loss of $18.1 million, or 27 cents per share, in the year earlier period. Despite the growing losses, the company managed to beat analysts' estimates of an 83-cent per-share loss. Revenue grew 20.7 percent, to $518.9 million compared to $429.8 million last year.

Leap attributed the loss to the cost of expanding into new markets, which accounted for 86 cents per share. The company added 385,000 customers in the fourth quarter, a healthy increase from last year's net adds of 152,000. The company's subscriber base grew 34 percent, to 3.8 million, on improved net additions. 

The company's churn rate also improved, dropping to 3.8 percent compared with 4.2 percent last year.

For the full year, revenue grew to $1.96 billion, up 20 percent from last year, when the company brought in $1.63 billion. Despite the rise in revenue, Leap's full-year losses widened to $147.8 million, or $2.17 per share, from a loss of $75.9 million, or $1.13 per share, last year.

The company expects to add more than 1.5 million customers in 2009 as its expansion into new markets generates net adds. Leap forecast its 2009 adjusted operating income before depreciation and amortization (OIBDA) to come in between $560 million and $640 million.

Discount carriers like Leap Wireless and competitor MetroPCS have benefitted from the downturn in the economy as consumers looking to cut household expenses have defected from landlines and turned to low-rate wireless plans.

MetroPCS fared better than Leap in the fourth quarter. Before the market opened yesterday, MetroPCS reported it had swung to a fourth-quarter profit on subscriber growth and rising service revenue. MetroPCS made $15 million in the fourth quarter on revenue of $724 million, up from last year's net loss of $47 million. It reported the best quarterly subscriber growth in its history, with 520,000 net subscriber additions.

Like Leap, MetroPCS will expand into new markets over the coming year. Though it plans to lower capital expenditures, MetroPCS said it will focus on building out networks to cover 40 million people during 2009 and 2010, including the Boston and New York metropolitan areas, where service was launched this month. The company forecast a rise in net customer additions, which should come in between 1.4 million and 1.7 million.

MetroPCS reaffirmed its November guidance on net subscriber additions, capital expenditures and earnings before interest, taxes, depreciation and amortization (EBITDA). For 2009, EBITDA should come in between $900 million and $1.1 billion, with net adds rising. Capital expenditures are expected to fall to between $700 million and $900 million, compared with last year's capex of $1.2 billion.


Nokia Releases 5800 XpressMusic in U.S.

By Monica Alleven

Nokia 5800 XpressMusicNokia says its 5800 XpressMusic device is now available in the United States.

The 5800 is a touch-screen device designed for the mass market, although its unsubsidized price is $399. It is being sold through Nokia Flagship stores in New York and Chicago, and at independent retailers and e-tailers.

In its press release today, Nokia didn't say it is launching Comes With Music in the United States, but it has said it wants to launch it in the U.S. market this year.

The device, already available in Europe, includes 8 GB memory for up to 6,000 tracks and support for all main digital music formats. It comes with built-in surround sound stereo speakers.

The device supports Flash content and includes a 3.2-inch screen display.

For a limited time, Nokia is offering a $50 voucher for Amazon Video on Demand and one month of free turn-by-turn voice-guided navigation through Ovi Maps.


Yahoo! Names Ko to Lead Mobile Team

By Monica Alleven

David Ko
David Ko

Yahoo! wants to make it clear: Mobile remains an integral part of its strategy. In fact, CEO Carol Bartz said in her blog yesterday that she's focused on providing consumers with awesome products - "the kind that get you so excited, you have to tell someone about them. Whether on your desktop, your mobile device, or even your TV."

Speculation about Yahoo's mobile strategy went into overdrive after word got out that Connected Life division head Marco Boerries was leaving the company. Under Boerries' leadership, Yahoo's Connected Life division developed a leadership position in the mobile space.

Now Yahoo has named David Ko, senior vice president at Yahoo! Mobile, as the new global head of the team, responsible for the mobile business, strategy and monetization. Ko has been with Yahoo! for nine years. Before leading the mobile business operations globally, he was managing director for Yahoo! Mobile's Asia Pacific business.

Executive changes at Yahoo! also mean the departure of CFO Blake Jorgensen.


New Yahoo! CEO Ushers Out CFO

By Michael Liedtke, AP Technology Writer

SAN FRANCISCO (AP) — After spending six weeks diagnosing Yahoo's troubles, new Chief Executive Carol Bartz started to prescribe a cure Thursday with a management shake-up that will usher out the Internet company's CFO.

Besides pushing CFO Blake Jorgensen out the door, the overhaul will expand the responsibilities of Yahoo's chief technology officer, Ari Balogh, and the company's top advertising executive in the United States, Hilary Schneider.

Bartz also created two jobs: a chief marketing officer and her own chief of staff.

Elisa Steele, who has been working at NetApp, will join Yahoo as chief marketing officer on March 23, while Joel Jones, a former McKinsey consultant who has been Yahoo's corporate strategist, becomes Bartz's chief of staff as of Thursday.

With the new pecking order, Bartz hopes to speed up Yahoo's decision-making and have a senior team that supports her strategy for turning around a company struggling with three years of declining profits - a downturn that had battered its stock price well before the market's overall decline.

Although Bartz still hasn't specified how she intends to get Yahoo back on track, she has left no doubt about her resolve to recapture the Internet pioneer's glory days.

"I'm singularly focused on providing you with awesome products. Period," Bartz wrote in a blog posting Thursday addressed to Yahoo's 500 million worldwide users.

Yahoo's previous two CEOs, co-founder Jerry Yang and former movie studio mogul Terry Semel, also attempted to revive Yahoo in recent years by reshuffling executives, but those moves never paid off. Bartz's reorganization is meant to last two to four years.

Investors appear to be betting that Bartz will deliver on her promises. Yahoo shares gained 50 cents, or 4 percent, to close Thursday at $12.98.

Yahoo hired Bartz, 60, last month to replace Yang, who exasperated many investors and employees with his wishy-washy management style. Yang also infuriated stockholders last year by turning down an opportunity to sell Yahoo to rival Microsoft for $47.5 billion, or $33 per share, well above the price of $19.18 just before the software maker announced its initial bid.

Although Microsoft CEO Steve Ballmer has repeatedly said he no longer wants to buy Yahoo in its entirety, he has indicated he still wants to explore a possible partnership that would involve Yahoo's online search engine, the second most popular behind that of Google.

Bartz so far has been lukewarm to the idea in her public remarks, but Jorgensen expressed an interest in working with Microsoft in a Wednesday presentation at an investor conference.

In a Thursday research note, Barclays Capital analyst Douglas Anmuth said he didn't consider Jorgensen's departure a sign Yahoo is any less interested in working with Microsoft.

But Anmuth wondered about the wisdom of letting Jorgensen go, given that Bartz came to Yahoo without any previous Internet experience. Jorgensen also was somewhat of a novice, having joined Yahoo in June 2007, but Anmuth thought he would at least provide Yahoo some stability.

Jorgensen will remain CFO until Bartz can find replacement. His departure isn't a total shock because he was an ally of former Yahoo President Susan Decker, who resigned last month after Bartz beat her out for the CEO job.

But Jorgensen provided no inkling he might be headed out the door when he met with USB analyst Benjamin Schachter earlier this week, Schachter wrote in a Thursday note.

"While we were fans of Blake, Bartz is clearly going to be leading the charge here," Schachter wrote.

Jorgensen is paid a salary of $500,000, according to Yahoo's most recent disclosures about executive compensation. The terms of his severance package weren't disclosed Thursday.

Besides changing CFOs, Yahoo also appointed a new leader to expand its service on to mobile devices. David Ko, already part of the mobile team, was promoted to the top job in the division to replace Marco Boerries, who is leaving the company after a four-year stint.

Bartz mainly wants to root out bureaucracy with her new chain of command.

"People here have impressed the hell out of me," Bartz wrote Thursday. "They're smart, dedicated, passionate, driven, and really nice. There's so much great energy and frankly lots of optimism. But there's also plenty that has bogged this company down. For starters, you'd be amazed at how complicated some things are here."

In hopes of simplifying things, Bartz is placing all of Yahoo's products under Balogh, who joined the company a year ago. The shift appears to lessen the authority of Ash Patel, who had been overseeing most of Yahoo's products.

Schneider's job is being expanded to include oversight of advertisers and partners in Canada, not just the United States. Bartz intends to hire another executive to steer Yahoo's advertising relationships in Mexico and overseas.

Finally, Yahoo is creating a new division to handle complaints from frustrated users and advertising customers.


U.S. Cellular Posts Loss

By Monica Alleven

U.S. Cellular posted a net loss of $200.1 million in the fourth quarter compared with the prior-year fourth quarter's net income of $29.2 million

In a conference call with analysts, U.S. Cellular executives acknowledged the highly competitive nature of the business and the economic situation but said promotions in December helped boost fourth-quarter additions. The company rolled out its Calling All Communities contest, as well as a promotion that involved a $50 service credit for certain activations in December.

Net retail postpaid additions tallied 41,000 in the fourth quarter, and data revenues represented 14.5 percent of service revenues. For the full year 2008, postpaid churn was at 1.5 percent.

The carrier is seeing an uptick in the sale of smartphones, which carry higher ARPU due to the data packages. U.S. Cellular plans to cover more than 60 percent of its cell sites with EV-DO by the end of this year. It has not committed to moving to LTE but executives indicated that's something they're likely to look at more in the 2010 timeframe.

About 95 percent of U.S. Cellular's retail customer base is postpaid, and it hasn't seen any major impact from Boost Mobile's $50 prepaid offering in its markets.


Novatel Wireless Slips to $3M Loss

By The Associated Press

SAN DIEGO (AP) — Novatel Wireless said Thursday that fourth-quarter sales dropped 45 percent and that the company slipped to a loss as dampened technology spending hurt the maker of wireless modems.

The San Diego-based company said its $3 million loss amounted to 10 cents per share during the last three months of 2008. In the same period a year earlier, Novatel had earned $11.5 million, or 35 cents per share.

Stripping out one-time charges, Novatel said it lost 6 cents per share in the latest period, which was a slightly bigger loss than analysts expected. Analysts polled by Thomson Reuters expected a loss of 5 cents per share on that same basis.

Sales were $65.1 million, compared with $118 million a year earlier. Sales were in line with analyst projections.

For all of 2008, the company lost $1.2 million, or 4 cents per share, on $321 million in revenue.

The company's guidance for the current quarter calls for $65 million to $70 million in sales — higher than the $61 million analysts were projecting. The loss is expected to be 5 cents to 9 cents per share, excluding one-time charges. Analysts were predicting a loss of 6 cents per share.

Before the results were announced, Novatel's stock price had fallen 2 cents to close at $6.25.

Keywords: baseband semiconductors, patent licensing, 3G, Treo Pro, Smartphone, Canada, fourth quarter, Nokia, Qualcomm, iSuppli, Texas Instruments, InterDigital, Global Wireless Technologies, Palm, Bell Mobility, PCTEL


FirstNews Briefs for Feb. 27, 2009

Companies in today's news: Nokia, Qualcomm, iSuppli, Texas Instruments, InterDigital, Global Wireless Technologies, Palm, Bell Mobility, PCTEL

• With its recent agreement with Nokia, Qualcomm is likely to solidify its lead in the global market for mobile-handset baseband semiconductors, according to iSuppli Corp. Based on iSuppli's preliminary estimate, Qualcomm in the fourth quarter accounted for 40.6 percent of worldwide revenue from shipments of mobile handset baseband semiconductors, up from 36.3 percent in the third quarter. Qualcomm expanded its lead over the No. 2 supplier, Texas Instruments, to 20.9 percentage points, up from 14.1 points in the third quarter.

InterDigital announced that its patent licensing subsidiaries have entered into a non-exclusive, worldwide, royalty-bearing patent license agreement with Global Wireless Technologies covering the sale of terminal units and infrastructure compliant with 2G, 2.5G, 3G and IEEE 802-based standards for the duration of the life of the licensed patents.

Palm announced that its Treo Pro smartphone is now available on Bell Mobility's EV-DO Rev. A network, marking its debut in Canada. The smartphone is now available to Bell Mobility clients for a limited-time price of $99.95 on a three-year contract.

PCTEL reported a GAAP net loss from operations of $10.8 million for the fourth quarter compared with net income of $9.5 million for the same period in 2007.



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