Shares of Leap Wireless (NASDAQ:
) are seeing much strength during Thursday's pre-market session
after the company's wholly-owned subsidiary, Cricket
Communications, announced it will offer Apple's (NASDAQ:
) iPhone on June 22, 2012.
Cricket will offer the iPhone 4S and iPhone 4 with its $55
per-month unlimited talk, text and data plan. Leap Wireless
signed a 3-year, $900 million iPhone commitment with Apple. The
company expects no change in its capital expenditure plan in
2012, with no significant impact to its financials.
However, this is not the only time Leap Wireless has seen
recent intraday strength in its share price.
Back in December 2011, Dow component AT&T (NYSE:
) dropped its $39 billion takeover bid for Deutsche Telekom's
(PK: DTEGY) T-Mobile unit after both the Federal Trade Commission
) and the Justice Department opposed the takeover.
In recent months, in order to make up for the failed takeover,
there has been chatter circulating that AT&T may be
interested in making a bid for Leap Wireless (NASDAQ:
According to Reuters citing people familiar with the matter,
AT&T has held talks with Leap Wireless in order to grow in
the maturing US carrier market. Supposedly, Leap Wireless hired
bankers to advise it on a potential bid.
A spokesperson from Leap Wireless would not comment on the
speculation. However, amid the news, CEO of Leap Wireless, Doug
Hutcheson, did address the positive news of the iPhone offering
news unveiled today.
"Our customers want the best products available and we are
excited to bring iPhone to our pre-paid consumers with an
industry leading $55 per-month service plan," said Hutcheson.
"Launching iPhone is a major milestone for us and we are proud to
offer iPhone customers attractive nationwide coverage, a robust
3G data network and a value-packed, no-contract plan."
Soon after the release, JP Morgan published a research report,
commenting on Leap Wireless' announcement that it will be
releasing two versions of the iPhone starting on June 22.
In the report, JP Morgan wrote, "We will watch with interest
how the iPhone impacts Cricket sales. The $399 and $499 price
points have historically been nearly irrelevant in the prepaid
landscape, and unlike T-Mobile's Value plan, customers will need
to come up with the full price on the day of sale. This is not
something that traditional prepaid customers can usually do.
However, we do believe that the iPhone could benefit Cricket in
terms of driving traffic to the store, with most customers
choosing a more reasonably priced device instead. Given the
launch is in the slow summer months, it could be a nice traffic
driver in 3Q."
JP Morgan maintained its Overweight rating on Leap Wireless,
which closed yesterday at $5.77.
Shares of Leap Wireless did trade over 7% higher soon after
the news hit the wires, however, shares are currently trading up
about 6.5% at $6.15 per share. Leap Wireless has seen better
days, as shares are down over 35% year-to-date.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.