Leap Wireless to Restate Results; Shares Plunge

Leap Wireless International said Friday it will restate results from 2004 to the second quarter of this year, after making errors in reporting revenue and operating expenses.

The mobile phone service provider's shares dropped more than 31 percent.

Leap also gave preliminary results for the third quarter and forecasts for the fourth quarter.

It said service revenue was $348 million to $352 million in the third quarter, net customer additions totaled 36,484 and churn, or the rate of cancellations, totaled 5.2 percent.

For the fourth quarter, it expected 70,000 to 130,000 net customer additions and churn at 4.4 percent to 4.7 percent.

Leap said it expected the restatements of its historical financial reports to result in a net cumulative reduction of about $20 million in service revenue and about $20 million in operating income.

Shares in MetroPCS Communications , seen as a potential merger partner, fell 18.37 percent, its lowest point since the company's market debut in April.

Leap said errors had included mistakenly recorded revenue from customers who had disconnected service. The restatements were the result of an internal review and were not attributable to any misconduct by company employees, it added.

In August, Leap reported second-quarter net income of $3.2 million, or 5 cents per share, compared with $7.5 million, or 12 cents a share in the same period a year earlier.

Second-quarter revenue rose 47 percent year-on-year to $393.2 million, slightly short of the average analyst estimate of $405 million according to Reuters Estimates.

CNBC.com contributed to this article.