Virgin Mobile USA reports 50% drop in earnings

Virgin Mobile USA's second-quarter profit fell 50% and revenue declined on slower customer growth and weaker cell phone usage by existing users amid the anemic US economy, a Reuters report said.

The company said its profit would decline further and it might only break even in the current quarter, but it said revenue declines would stabilize in the quarter, sending its shares up nearly 10% to €2.01 (US$3) from their close of €1.84 (US$2.74) on the New York Stock Exchange, the Reuters report added.

Virgin Mobile USA said new service plans, handsets, increased distribution and operational cost savings it has put in place in recent quarters would 'enable it to continue to improve business trends in the second half of 2008, and position the company for growth in 2009.'

The report further said On a net basis, Virgin Mobile USA said it lost 111,273 customers in the second quarter. Gross customer additions, excluding customer cancellations, declined to 728,370 from 785,236.

Virgin Mobile USA, which has agreed to buy smaller rival Helio, said second-quarter profit fell to €2.4 million (US$3.5 million), from €4.7 million (US$7 million) in the year-ago quarter. Service revenue dropped to €197.7 million (US$291.4 million) from €208.2 million (US$309.7 million).