Virgin Mobile U.S. profit down

NEW YORK (Reuters) - Wireless service provider Virgin Mobile VM.N on Monday posted a drop in quarterly profit and revenue on weak subscriber growth and forecast net customer losses in the current quarter.

Its shares fell 20 percent to $3 after it forecast net customer losses ranging from 130,000 to 160,000 in the second quarter but said it was keeping its full year outlook and would return to growth in the second half of 2008.

Chief Executive Dan Schulman said in an interview that while the number of customers giving up their mobile phones because of economic hardship appeared to be slowing, the second quarter tended to be the worst of the year for Virgin, which sells prepaid phones and services, often given as gifts.

"You're out of the Christmas and gift card season and you haven't gotten to back to school yet," said Schulman, who noted that students often buy or are given prepaid phones when they return to school in the fall.

He did not give a specific customer estimate for the second half of the year, troubling some investors.

"There still remains a lot of uncertainty in the low end of the market for prepaid customers," said Roe Equity Research analyst Kevin Roe. "The visibility is poor."

Virgin, which is partly owned by Richard Branson's Virgin VA.UL and Sprint Nextel Corp (S.N), said its profit fell to $4.7 million (2.4 million pounds)or 7 cents per diluted share from $19.2 million or 38 cents per share in the year-ago quarter. Operating revenue fell to $326.8 million from $339.3 million.

Virgin, which has come under pressure from increasing competition from bigger rivals and economic concerns among its customers, said it added 17,772 customers in the quarter.

This was in line with its forecast, which had disappointed investors, for net additions in the range of 5,000 to 20,000.