Leap-ing off a cliff: Leap Wireless shares plunge 34%

Last week, MetroPCS Communications (NYSE: PCS) ended its $4 billion merger deal for Leap Wireless (NASDAQ: LEAP), which thought the deal wasn't good enough. Both companies provide wireless services to those that the major carriers -- like Verizon (NYSE: VZ) and AT&T (NYSE: T) -- tend to avoid (such as low-income customers).

Well, LEAP shareholders may be regretting things. On the company's latest news bomb, the stock has plunged 34% to $38.33. In fact, since late July, the stock is down a stunning 61%.

First of all, LEAP said it will have to restate financial results for 2004, 2005, 2006 and the first half of 2007. The items include service revenues, operating expenses and so on. The amount is about $20 million or so.

Not so big, huh? Maybe not. After all, the company could be in default on its $890 million of debt.

Oh, and the company garnered only 36,500 subscribers in Q3 (the goal was 40,000). And, it looks like Q4 growth will be meager too.

All in all, it's hard to find anything good here. Then again, Leap's space is full of buyout activity so I wouldn't be surprised if we eventually hear some more buyout buzz on the company, especially in light of the big cut in the valuation.

PCS shares are tumbling over 20% as well today.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.