Investors Bearing Leap's Lament

Given the pummeling that shares of Leap Wireless (Nasdaq: LEAP  ) have endured since the company spurned the September merger overture from fellow regional wireless service provider MetroPCS (NYSE: PCS  ) , investors may be tempted to look back in woe.

Does hindsight reveal to us that Leap should have taken the deal?

Well, if MetroPCS had offered $4.7 billion in cash for Leap, the answer would be easy: Leap blew it by not cashing out. But the merger was a stock swap deal, and MetroPCS shares have fallen in tandem with Leap, though not as drastically.

Soon after MetroPCS withdrew its merger offer, Leap announced that it would restate financial results going back more than three years, dinging revenue by $20 million over the period. After reporting third-quarter results that largely failed to impress analysts, Leap's shares now sit more than 40% lower than they did little more than a month ago. Yet while some peeved investors feel wronged, and have filed class action suits against Leap and its management, a stock merger wouldn't have saved them.

But the nixed deal did save MetroPCS a lot of headaches. The two regional players have enough on their hands dealing with competition from big boys AT&T (NYSE: T  ) , Sprint Nextel (NYSE: S  ) , and Verizon Wireless, a joint venture between Verizon Communications (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) . On top of this, an important auction for new spectrum starts in January -- not the time you want to see your credit dinged by bookkeeping errors.

MetroPCS now has time to sit back and watch as Leap gets its house in order before floating merger talk again. Since the Federal Communications Commission mandates a "quiet period" prior to the auctions, Leap and MetroPCS can't discuss a merger until the auction is complete next year. Investors will just have to wait until spring to see whether a thaw comes or the chill remains between the two companies.

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