Leap Wireless International Inc. (LEAP) will offer innovative products in 2011. The low-cost wireless services provider is all set to introduce several Android-based mobile devices in 2011. Android mobile phone software is developed by Google Inc. (GOOG) and at present is the most sought after operating system in global mobile devices market.
In the upcoming summer, Leap Wireless will launch a 7-inch Android-based tablet called “ViewSonic” supporting Wi-Fi functions. However, the tablet will not have any built-in 3G CDMA connectivity.
In the first half of 2010, Leap Wireless will introduce two Android-based smartphones. One is Samsunf Indulge for a price of $300-$350 and the other is Huawei Ascend 2 for a price of $159. In the second half of 2011, Leap Wireless will further launch 7-8 Android-based smartphones.
After a gap of two consecutive quarters, Leap Wireless generated net customer addition in the fourth quarter of 2010. This turnaround was mainly possible due to management’s strategy to introduce high-end smartphones, especially those running on the Android operating system.
The company sold 400,000 Android-based smartphones during the fourth quarter of 2010. Smartphone market is a highly lucrative segment that offers sustainable growth and margin improvement. The major feature is that Leap Wireless services will offer smartphones without any contract while all the national wireless carriers require customers to enter a service plan.
Recently, Leap Wireless entered into an agreement with LightSquared venture to utilize its nationwide wholesale LTE network. The company is working with Qualcomm Inc. (QCOM) to develop chipsets capable of roaming from Leap Wireless’ LTE network and onto the LTE network of LightSquared. Qualcomm is the authorized chipset developer for LightSquared.
We maintain our long-term Neutral recommendation on Leap Wireless. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.
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