Leap Wireless Closes Cricket Stores, Cuts 180 Employees

Amid considerable speculation about a potential merger, San Diego’s Leap Wireless (NASDAQ: [[ticker:LEAP]]) has trimmed about 4 percent of its workforce and closed or transferred 38 of its Cricket Communications storefronts.

Leap spokesman Greg Lund confirms that the flat-rate wireless service provider laid off a total of 180 employees nationwide on March 1 as part of a cost-cutting review, which the company did not announce. The cutbacks occurred after Leap reported its fourth-quarter and 2009 financial results on Feb. 25 . The company posted a bigger-than-expected loss of $64 million, or 82 cents a share, for the fourth quarter, on revenue of $547 million.

The 12-year-old company has been the subject of merger rumors since reports surfaced in January that Leap had hired Goldman Sachs as a strategic adviser in a possible sale of the business. Kansas City-based Sprint and Dallas-based MetroPCS are two companies most frequently mentioned as potential buyout partners. MetroPCS made an unsolicited bid in 2007 for Leap, but a deal never materialized.

Two weeks ago, Leap announced that it is forming a joint venture with Pocket Communications of San Antonio, TX, to provide pre-paid wireless services to customers of both companies in South Texas. Under terms of the deal, Leap holds a controlling 76-percent interest in the joint venture, and Pocket’s 24-percent stake becomes available after 3½ years.

Whether Leap is taking these steps in preparations for a corporate merger is another matter. Lund says the recent cutbacks were made as part of a two-prong financial review of the company operations. He says Leap has eliminated 90 positions in its corporate structure, including 45 at its San Diego headquarters and 45 at its Denver, CO, operating facility. Leap eliminated another 90 jobs as part of its decision to close 27 Cricket storefronts and to convert 11 company-owned stores into independently owned and operated stores. The company has about 4,200 employees and 242 company-owned stores remaining, Lund says.

The Leap spokesman characterized the cuts as regrettable, but part of a routine assessment of Leap’s operations and how best to use its resources. “One of the reasons we can offer the prices that we do is because we operate a pretty Spartan and low-cost operation,” Lund says.

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.