A slew of rumors about Helio and Virgin Mobile (NYSE: VM) are emerging this afternoon … none of these seem to be vetted for truthfulness, but that hasn’t stopped a parade of bloggers from following a post by Engadget, which reports that Helio’s stores are closing, SK Telecom (NYSE: SKM) is backing out of Helio, and despite there being no actual merger, Helio customers will soon be transferred over to Virgin Mobile’s network. At this point, none of these rumors appear to be true. I’ve called a couple of the stores, and they answer the phone. One poor retail employee said she’s been hearing the same rumors about store closures, but that she hasn’t been told anything official and believes she’ll have a job for at least a month because her schedule tells her so. Next stop is asking the company if anything is true.
Official Helio statement: “We haven’t made any announcements so there is no news to share. Helio, SK Telecom and Virgin Mobile continue to be in discussions exploring possible strategic opportunities. We won’t have additional information unless a definitive agreement is reached.” The most believable of all these rumors is that Helio’s stores, and maybe their kiosks, are closing. The stores, in particular, are in prime real-estate locations are probably making the company hemorrhage cash. It would be best to shut them down now before any sort of tie-up between Helio and Virgin Mobile, which would be smart to adopt Virgin’s low-cost distribution strategy of being in high-traffic stores, such as Wal-Mart (NYSE: WMT) and Sears. Still, even if the stores close, it’s only the beginning. They company will save costs by having fewer employees, but will have to continue making lease payments until they negotiate otherwise.
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