Leap Wireless (LEAP) is next in line to get acquired
Just two weeks ago at CES, T-Mobile CEO John Legere said in statement to Reuters that Leap is "one of those things that makes extreme sense for us to look at".
If you already own shares of Leap, I'm sure you've heard the story. For those of you who don't have Leap on your watch list, here's what happened:
After Mr. Legere's statement, Leap made a 2 day move from $6.28 to $7.15, a decent 14% gain (if you were able to nail the exact bottom and the exact top). However, in the 10 days since hitting that $7.15 price, shares fell all the way down to $5.78.
Something doesn't add up. A downgrade came in from Jeffries on the 17th, but shares had already tanked nearly a point by then. Why was the market so quick to price out a potential takeover of LEAP ?
Mastery Bottom Line:
There could be a great opportunity here with Leap. Naysayers will point to the incompatible networks between T-Mobile (GSM) and Leap (CDMA). But T-Mobile has disproved this notion with the recent acquisition of Metro PCS.
CDMA (Leap's Network) is being killed by all of the operators to make room for Voice over LTE.
New CEO John Legere is obviously hungry, and he has a plan. Prepaid wireless offers the best margins. Doesn't it make sense to add to T-Mobile's prepaid subscriber base by buying out Leap?
I believe so. I also believe that the question is not if Leap will get bought out - it's a matter of when the Leap will get bought out.
I have two concerns. One being the timing of an acquisition by T-Mobile, which I suspect does not have the ability to handle multiple acquisitions from an operational standpoint. Acquisitions are not an easy task. However, if they don't swoop in soon with an offer, another operator will.
AT&T (T) is planning on shelling out $780M for Alltel's 585k subscriber base and spectrum. Leap has 6 million subscribers - nothing to scoff at. But, Leap also has quite a bit of debt. It will be interesting to see how things play out in 2013 for Leap.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- Consumer Sentiment Bounces Back for August | Financial Sense
- The Market Doesn’t Know How Stupid You Are | iBankCoin.com
- A-D Line Foretells Job Openings | Financial Sense
- What It's All About: Russia, China Begin Construction Of World's Largest Gas Pipeline | ZeroHedge
- The Fall Is Golden For Bullion Bulls | ZeroHedge
- STTG Market Recap August 28, 2014 | FundMyMutualFund
- Markets Set To Surge On Global Manufacturing PMI Bloodbath | ZeroHedge
The most relevant financial news and articles from the Internets
- The Bad News Out Of Europe Is Intensifying (DIA, SPY, SPX, QQQ) | Business Insider
- Hong Kong activists in fightback after China vote... | Business Insider
- Mario Draghi And The European Central Bank Can't Ignore This Chart | Business Insider
- Here Are 10 Things That Are Right With America | Business Insider
- Gross Photos Show Sewer Workers Battling A '... | Business Insider
- Libyan Militiamen Take Over Part Of An Evacuated US Embassy... | Business Insider
- Health workers death toll mounts in W.Africa as Ebola... | Business Insider