In Leap Wireless International’s case, it sounds like it’s going through a lot of pain before the gains set in. Leap reported a third-quarter net loss of $533.3 million, or $7.06 per share, and a net loss of about 200,000 customers. Churn for the quarter was 5.5 percent.

The company said its losses for the quarter reflect charges related to goodwill and previous network expansion costs related to network design, site acquisition and capitalized interest.

While the results didn’t sound good – and shares in Leap were trading down about 5 percent at one point in after-hours trading yesterday – company executives took analysts through a series of 20+ slides and shared some early indications their strategy is on the right track. Back in August, Leap outlined a big transformation for its business that included a greater emphasis on smartphones and an arrangement that enables national 3G roaming.

During a conference call with analysts yesterday, Leap President and CEO Doug Hutcheson said as the company moves into the fourth and first quarters, typically its strongest, he’s increasingly assured that the company has made the right changes for long-term success. “Today we believe we are positioned well,” he said.

Not everyone is convinced of that. After the call, Bernstein Research analyst Craig Moffett summed it up as such in a research note: “Quick Take – LEAP of Faith (or… It Takes an Optimist).” While seasonally strong fourth and first quarter selling seasons and new smartphone initiatives likely will improve short-term conditions, “longer term, however, it would take a bona fide optimist to be truly encouraged,” Moffett said.

“At the heart of Leap’s competitive advantage is (was?) a cost structure that leaves room for attractive margins at prices others (Sprint and T-Mobile, in particular) can’t meet. Our concern in recent months has been that this cost structure is increasingly being compromised by an all-things-to-all-comers strategy that has Leap on the cusp of competing for national market share,” Moffett wrote.

Leap management pointed to indications their strategy is working. Since the launch of its low-cost Android device in mid-October, more than one-third of its non-PAYGo handset sales have been for smartphone devices, which are expected to lead to significant ARPU improvements in coming quarters.

At the end of October, handset upgrades had tripled and nearly 50 percent of Leap’s voice customers were on new all-inclusive plans, with about 70 percent of those customers purchasing $45 and higher rate plans. Early data suggests that customers who migrate to all-inclusive plans and upgrade their handset are 70 percent less likely to churn.

As for LTE, which rival MetroPCS Communications is rolling out, Leap plans on some trial markets next year, but didn’t announce any near-term changes in strategy. Asked if the company has any interest in partnering with companies like LightSquared or Clearwire, Hutcheson reiterated that management will look both at what they can do on their own and alternatives that provide attractive pricing.

MetroPCS reports its third-quarter results on Thursday.