Leap Wireless International Inc. (LEAP), a leading provider of digital wireless communication services in the U.S. primarily through its wholly-owned subsidiary Cricket Communications Inc. (popularly known as “Cricket”), plans to offer its popular “Muve Music” service on Samsung’s new Android-based smartphone called “Samsung Vitality.”
Earlier, Leap Wireless introduced their unlimited music download facilities for its 3G wireless subscribers. The new digital music service is called “Muve Music” and is presently offering to all its existing markets.
Continuous launch of smartphones coupled with its unlimited music download facility, has placed the company just behind Rhapsody, another online music service provider with 800000 subscribers, may act as positive catalyst for growth.
Despite such positive traits, we remain cautious about Leap Wireless as it faces intense competition from other carriers like America Movil’s (AMX) Tracfone and MetroPCS (PCS), which also offers such attractive plans. Furthermore, given the company’s huge debt and poor financial results in the last quarter, we prefer to remain on the sidelines.
We, thus, maintain our long-term Neutral recommendation for Leap Wireless International Inc. Currently, Leap Wireless International Inc has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
