Leap Wireless International, aka Cricket Communications, outlined progress in its financial performance in its second-quarter earnings report, but a wider loss prompted shares to fall more than 6 percent in after-hours trading yesterday. By this morning, shares were down a whopping 26 percent, at $7.32.

Leap’s net loss in the second quarter was $58.4 million compared with a net loss of $19.3 million in the year-ago quarter. Operating income for the second quarter was $12.3 million compared with operating income of $49.2 million for the year-ago quarter and an operating loss of $18.1 million for the first quarter of 2011.

The company reported a net gain of about 29,000 voice customers and a net loss of about 132,000 broadband customers, resulting in a total net loss of about 103,000 customers. The net loss in broadband customers reflected higher device prices, an emphasis on higher value service plans and increased network management initiatives, the company said.  

Despite the beating the stock took, President and CEO Doug Hutcheson was upbeat during a conference call with analysts, saying he’s pleased with the progress the company has made. It was a year ago yesterday that the company outlined for the investment community the changes it planned to make. The company has five key growth initiatives, including opening about 250 new Cricket-branded doors in the first half of the year and another 250 in the second half.

Churn was 4.2 percent, an improvement over last year, and on that front: “Good progress, more to come,” Hutcheson said.

Cricket ended July with 150,000 customers on the Muve Music service, where customers are less likely to churn, and customers have downloaded 130 million songs. On average, they listen to three hours of music per day. A national rollout is in the works.

ARPU was $40.15 this quarter, and the company expects further improvements as more smartphones are adopted. Nearly 50 percent of new handset sales in the quarter were for smartphones and Muve Music devices and about 8 percent of the customer base upgraded their handsets during the quarter, usually to better devices with higher ARPU service plans.

Leap continues to cater to its traditional demographic, but it is also seeing a larger higher income demographic coming on board, driven by the device selection.

In a quick take research note with the title “Where Did the Prepaid Mojo Go?,” Sanford Bernstein analyst Craig Moffett said the prepaid market looks “a little, well… ill.” On Tuesday, MetroPCS missed narrowly on an array of metrics, and it added up to a big miss on the bottom line. Leap Wireless also missed on a similarly wide array of metrics, and it added up to an equally big miss on the bottom line, the note said.

Bernstein’s note concluded that competitive intensity, in short, is still a fact of life in wireless. At the center of the debate is the health of the prepaid segment overall as consumers struggle with affordability, and the best bet for prepaid is to attract customers from postpaid, where affordability is less of a concern.