Virgin Mobile USA (NYSE: VM) reported its second-quarter earnings today saying its performance was affected by changes in consumer spending and a poor economy. During the quarter, profit fell 50 percent to $3.5 million and net service revenues fell 6 percent to $291.4 million, compared to the year ago period. However, the company performed better than expected. Here’s highlights from the call (transcript by Seeking Alpha):
— Helio update: VMUSA’s CEO Dan Schulman said as previously stated Helio was contractually required to cut their costs by about 70 percent before the deal closes and they are on track to do this by reducing its staff by more than two-thirds and have closed nearly all of their retail stores and kiosks. In addition, Helio is already getting the cost benefit of Virgin’s network rates. Schulman hopes to close the deal in the next few weeks. “The Helio acquisition is transformative for us. The addition of a post-paid platform, outstanding data services, and compelling handsets will enable us to offer more value to our entire customer base; prepaid, hybrid and post-paid alike,” he said. Watch out for new products and services, and plans and handset over the next several quarters.
— Customer Additions: The company lost about 111,000 customer during the quarter, which was an increase over the year-ago period, but better than expectations. The quarter can be the seasonally weakest period for net customer additions, however, was able to produce an improved result due to churn being better than expected for the quarter at 5.6 percent. Churn was better than expected because they were able to identify high-value customers at risk, and stronger sales of high-end handsets during the past few quarters is contributing improved churn.
From the Q&A:
How’s the economy affecting the number of minutes used?: CFO John Feehan: “We have seen our prepaid usage be fairly stable throughout the first half of the year and right in line with what we projected for the year if not slightly better. So while we did come into the year with that mid-single digit decrease we have seen very slight decreases in usage which is a normal trend as you come out of the first quarter with a lot of new gross ads into the second quarter, it