MetroPCS growing, but not at expected rate

We’ll admit it: We’re not the stock market buffs you make us out to be. Yeah, we read sites like Motley Fool, but all in all, no matter how hard we try to figure out what everything means in the market, we come up short. So, as such, we don’t do much stock reporting here in an attempt to not bore you to death. However, some market news from over the weekend found our Inbox, and since it’s prepaid related and a little absurd, we figured we’d share. The preface: MetroPCS reported greatly increased earnings for the second quarter of 2007. This is a good thing, right? They had a net income of $23 million during this quarter last year, and more than doubled that this year, reporting earnings of $58 million. Whoo hoo! Go Metro! They actually beat expectations, which were 13 cents a share — Metro’s increase was averaged out to 17 cents a share. So what does Metro’s stock do on the heels of this wonderful news? Drops 21.3 percent Friday afternoon. Yes, they doubled earnings but lost a very large chunk of value on the market. And you wonder why we don’t keep up with these things. Here’s the deal, though: Analysts expected Metro to add over 200,000 subscribers, and they only ended up with 155,000. Excuse us? 200,000? Have you seen the very limited areas that Metro covers? We don’t understand how anyone could expect them to add 200,000 just from those areas; we’re actually very impressed that they added 155,000. Philip Cusick, analyst with Bear Stearns, offers some optimistic insight:

“Over the years Leap’s stock has tended to trade poorly in the summer months as investors misinterpret seasonal slowdowns as secular downturns,” he wrote. “We believe that this is happening again with MetroPCS and Leap today, creating an opportunity for investors to buy both stocks into what should be strong fourth-quarter/first-quarter trends, and a strong third quarter for Metro due to the coming (Los Angeles) launch.”

Buy high, sell low; that’s what we always say. Uh, wait a second… [Dallas Business Journal] [Houston Chronicle]]]>