Virgin Mobile USA quarterly loss narrows

By Gina Keating

LOS ANGELES (Reuters) - Virgin Mobile USA (VM.N: Quote, Profile, Research) on Wednesday posted a narrower fourth-quarter loss as revenue rose on the addition of new subscribers but a disappointing forecast sent its shares down 21 percent in after-hours trade.

The latest share price drop for Virgin Mobile USA, which went public in October at $15 per share, made for a contentious conference call between the company and its investors who closely questioned the lower-than-expected fiscal year forecast.

Shares of Virgin Mobile USA were trading at $3.30 in after-hours trade on Wednesday.

"No one is more frustrated by the stock prices than we are," Chief Executive Dan Schulman told analysts on Wednesday. "We strongly believe we have the right business strategy and value proposition not only to weather the (economic downturn) but to come out" with strong growth.

Virgin Mobile USA has seen its results pressured by competition from national carriers expanding into Virgin's "pay-as-you-go" space, and from the economic slowdown, which has forced consumer belt tightening.

For fiscal 2008, the company expects revenue to be flat, year over year, and for adjusted EBITDA to be between $105 million and $130 million, and for earnings to reach 19 cents to 35 cents per share.

But Wall Street was looking for fiscal year revenues to grow by 20 percent to $1.46 billion, and for EBITDA of $142.8 million and net earnings of 71 cents per share, according to Reuters Estimates.

"The company has consistently, from the IPO to today, lowered their forward expectations and I think a lot of investors are just scratching their heads wondering what has materially changed," said Stanford Group analyst Michael Nelson, who has a sell rating on the company.