Virgin Mobile USA Bombs Q4

“Virtual” wireless carrier Virgin Mobile USA (VM) didn’t even meet Wall Street’s lowered Q4 sales expectations. The company reported $327 million of Q4 revenue, up 10% from a year ago, but short of Wall Street’s $347 million prediction.

Silver lining: EPS came in at a 30 cents per share loss, slightly better than the Street’s 33 cents per share consensus loss. And the company is almost profitable on an operating basis: Virgin reported a $2.6 million operating loss, much better than the $31.3 million operating loss during Q4 2006. Net loss improved to $14.7 million from $44.9 million during Q4 2006.

More important news, which we’ve known since last month: Subscriber growth missed the company’s own projections. Virgin Mobile added only 210,000 net subscribers during Q4, down 66% y/y. But to get there, the company had to sign up almost 1 million gross subs during the quarter, and lost almost 750,000.

Why? The company said it didn’t want to stoop to the ultra-cheap promotions some competitors were running during Q4. “We maintained a disciplined customer acquisition strategy; while competitors were aggressively lowering prices in the fourth quarter to impact gross adds, we chose not to pursue what historically have proven to be low-value, low-tenure customers,” CEO Dan Schulman said in a statement.

Other lousy numbers: Customers spent less money per month — $20.14 on average, down 9% y/y. And the company’s cost to acquire subscribers jumped 26% to $121.

See Also: Virgin Mobile USA Q4 Growth Misses

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