Virgin Mobile in Trouble

Virgin's cellphone service in the US may face a dramatic setback after continued plunges in the company's stock, according to sources in touch with VentureBeat. Having seen its share value drop 85 percent from October to April, the mobile virtual network operator (MVNO) is now understood to be cutting as much as 300 of the 400 staffers that run the US branch, significantly scaling back its ability to run in the country amid doubts for its future. Executives have received pay raises but only to compensate for poor stock options; the Chief Information Officer role has remained empty for months after two quick departures, the investigation notes.

The company is nonetheless said to be hesitant and may not go through with any cuts. If put into place, the alleged plan would distribute cuts over nine months and see the affect positions handled through outsourcing work to IBM.

Virgin's difficulties cast further doubt on MVNOs in the US, which have rarely proven successful in part through a need to pay for access to phone networks used by Sprint and other providers. High-profile rival Amp'd Mobile was forced to shut down in 2007 with many of its customers failing to pay for their services, while Helio has furthered its major losses despite investments from its Korean partner, SK Telecom.

By Electronista Staff