We opened a can of worms last week when we pointed out how the S&P 1500 Wireless Index was a bearish freight train despite the fact that some - not all, but some - of these stocks were undeservedly being dumped. Mobile Telesystems OJSC (MBT) didn’t help the cause any today. Russia’s largest wireless service provider saw it’s net income fall 14.6% last quarter, on a 23% decline in revenues.

There’s a slight upside…. the $2.02 billion in sales was better than analyst’s expectations of $1.98 billion. And, the $563 million in income was stronger than analyst expectations of $541 million. There’s a problem though - even that number may be a little misleading. Had it not been for a fortunate currency exchange fluctuation, Mobile Telesystems would have knocked another $198 million off the bottom line for the quarter. In other words, MTS would have earned $365 million instead…. well under the $659 million earned during the second quarter of last year.

A handful of things have become clear….

1. The problems being experienced by most wireless companies are universal/global
2. Though Mobile Telesystems is an exception to this trend, revenues are largely dropping because subscribers are being lost
3. Incomes are up for the wrong reasons…… mostly because of expense cuts, but in MTS’s case because of currency swings

We still contend there are some very solid companies being thrown out with the baby’s bathwater, but at the same time we can’t encourage anyone to step in front of a bus until these little shots of troubling news have eased up.

By the way, we also looked at another wireless company’s earnings this morning - Virgin Mobile USA (VM). It was the same higher income/lower sales act we’ve been hearing from most of these stocks.

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