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VoiceStream Wireless misses estimates but sales skyrocket

    VoiceStream Wireless posted a wider-than-expected loss in its second quarter Tuesday, dropping $419.7 million, or $2.16 a share, on sales of $453.6 million.

    First Call Corp. consensus expected the wireless telephone company to lose $1.62 a share in the quarter.

    VoiceStream (Nasdaq: VSTR) shares closed off 1 15/16 to 122 1/4 ahead of the earnings report.

    The operating loss before non-cash items was $61.4 million compared with a loss of $29 million last year.

    Despite the huge loss, VoiceStream can only consider the past three months an unqualified success.

    In late July, Deutsche Telekom AG (NYSE: DT) announced it would pay a huge premium to acquire VoiceStream for $50.7 billion in stock.

    The deal, which provides the German company with a foothold in the United States, is expected to face intense scrutiny in Congress, where many legislators have expressed concern about the 58-percent stake the German government holds in Deutsche Telekom.

    The fact that VoiceStream consistently missed analysts' estimates in the past year hardly matters considering the exceptional growth it has enjoyed during this period.

    The $453.6 million in sales marks a stunning improvement from the year-ago quarter when it lost $132.8 million, or $1.39 a share, on sales of $109.1 million.

    More impressive, VoiceStream's total subscriber base surged 365 percent from the year-ago quarter to 2.6 million customers.

    Total services sales jumped 331 percent from the same period last year to more than $369 million.

    "VoiceStream has had another excellent quarter with continued growth in both customers and revenues," said CEO John Stanton in a prepared release. "On July 24, we announced the merger of VoiceStream with Deutsche Telekom. This is a compelling strategic opportunity for VoiceStream to partner with one of the world's leading telecommunications companies. It is also an extremely attractive opportunity for both sets of shareholders and for our employees."

    Last quarter, VoiceStream missed analysts' estimates, dropping $203.3 million, or $1.68 a share, on sales of $257 million.

    Its shares surged to a 52-week high of 161 in March after falling to a low of 34 5/8 last August.

    Seventeen of the 22 analysts following the stock rate it either a "buy" or "strong buy."

    First Call Corp. consensus expects it to lose $6.90 a share in the fiscal year.