Virgin Mobile USA cuts 10 percent of workforce

Virgin Mobile USA announced it is eliminating approximately 45 positions in its New Jersey and California offices, slashing about 10 percent of its workforce. In a memo to employees, Virgin Mobile USA CEO Dan Schulman blamed the cuts on "continued synergies" resulting from the MVNO's transition of IT services to IBM and its $38 million acquisition [1] of SK Telecom's troubled U.S. wireless unit Helio. "We have assessed the status of the company post-integration and have identified some remaining duplication of assignments," Schulman writes. "Our intent is to expand our investment in both our prepaid and new postpaid business and, in order to do so profitably, we must continue to identify opportunities to reduce operating costs across all areas."

Last week, Virgin Mobile USA posted [2] higher-than-expected third-quarter earnings, with profits rising to $4.1 million compared to a net loss of $7.4 million a year ago. The quarter coincided with the Helio acquisition, a deal that heralded revised rates from network operator partner Sprint resulting in an 8 percent cost-per-minute reduction, the addition of roughly 17,000 Helio subscribers and a reduction in net debt totaling between $35 million and $40 million. Virgin Mobile USA reported its average revenue per user for the third quarter was $20.19, down 2 percent year-over-year but up 5 percent from the second quarter. According to Virgin, the sequential growth is the result of continued adoption of the MVNO's new higher cost plans as well as the impact of the Helio deal. As of Sept. 30, Virgin boasted a subscriber base of approximately 5.2 million, a 6 percent increase over Q3 2007, also credited in part to the Helio acquisition.

For more on the Virgin Mobile job cuts:
- read this release [3]